Toshiba Corp yesterday announced plans to split into two companies, revising a controversial proposal to divide into three following a tumultuous period for the storied industrial conglomerate.
The group said it plans to spin off its device segment, including its semiconductor business, in a bid to speed up decisionmaking and boost stock performance.
Shareholders, who have clashed with management on the best way forward for the troubled company, must still approve the proposal in a vote expected next month.
Photo: AFP
The original spin-off plan faced stiff opposition from some key investors.
The firm also said it would unload its stake in air-conditioning business Toshiba Carrier Corp, and seek to sell its elevator and lighting units.
“We believe a spin-off is optimal,” Toshiba president and CEO Satoshi Tsunakawa told investors, promising it would “enable more agile and flexible operations.”
He said the sprawling business “struggled with the conglomerate discount and slowness in decisionmaking” in the past, and streamlining operations would allow investors to choose the portion of the business that interested them.
Toshiba initially unveiled a plan to split into three in November last year, in what analysts called a test case for other Japanese giants.
However, yesterday it said that “since this is the first large-scale spin-off transaction in Japan ... it turned out there were obstacles which were not initially expected.”
Among those were higher-than-expected costs, and an extensive process to list the two new entities.
A two-way split instead “can significantly reduce separation costs, secure financial soundness for each company, and significantly reduce spin-off uncertainty,” the company said.
The spin-off is expected to cost ￥20 billion (US$174 million) over two years, with running costs also increasing by ￥13 billion a year.
However, Tsunakawa said that would be offset by plans to reduce operating costs by ￥30 billion annually.
The Japanese giant wants the split finalized by the second half of the 2022-2023 fiscal year, but it could yet face shareholder opposition.
Toshiba dates back to 1875, and was once a symbol of Japan’s advanced technological and economic power, but it has been mired in turmoil for several years.
Last year, shareholders voted to oust the board’s chairman after a series of scandals and losses, in a rare victory for activist investors in corporate Japan.
As part of the overhaul, the company yesterday declared Toshiba Tec Corp, and its air-conditioning, elevator and lighting units “non-core businesses.”
It has already agreed to the sale of Toshiba Carrier to the US-based Carrier Corp in a deal reportedly worth about ￥100 billion.
The conglomerate currently owns 60 percent of the air-con company’s shares and is to retain only 5 percent when the sale is completed later this year.
It said it hoped to reach deals to offload the elevator and lighting units within the next two months.
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