Toshiba said on Friday it would split into three listed companies that would focus on infrastructure, devices and semiconductors in a major restructuring of the long-embattled Japanese conglomerate.
The infrastructure and devices companies would be spun off, while the remaining company will hold a 40% stake in chipmaker Kioxia Holdings.
Toshiba’s board ruled out pursuing a deal to take the whole company private. The envisaged split would streamline business operations and appease shareholders disgruntled by weak growth and corporate value.
Toshiba aims to complete the listing of the firms in the latter half of fiscal 2023.
Analysts were sceptical about the timeframe. “If this were to happen within the next 3-6 months, we would have seen it as extremely bullish,” said Atul Goyal, equity analyst at Jefferies. “But if this is planned for 2023, we are less bullish.”
Split Needs Shareholder Nod
The proposed restructuring of Toshiba must win the approval of shareholders at an extraordinary general meeting in order to go ahead.
Toshiba’s trials and tribulations have cost the careers of several executives in recent months.
In April, then-chief executive Nobuaki Kurumatani resigned amid controversy over a $20 billion buyout bid from CVC Capital Partners.
The company’s dire straits stem from 2017, when Toshiba narrowly avoided collapse following an accounting scandal and the bankruptcy of its US nuclear business.
But the company needed almost $6 billion in cash to shore up its balance sheet and avoid delisting from the Tokyo Stock Exchange.
Activist Funds Force Shake-up
With few choices left, it authorised an equity raising that allowed international activist funds to join its shareholders’ register. They eventually amassed about 20% of the company.
US-based Elliott Management increased its holding in Toshiba to just under 5%, joining a growing number of disillusioned foreign investors.
Earlier this year, Singapore-based Effissimo Capital Management forced the company to commission an independent investigation after it found that the board had asked the Japanese trade ministry to sanction minority investors on Toshiba’s behalf.
The episode resulted in the ousting of then chairman Osamu Nagayama in a dramatic June vote.
The company’s shares fell 1.3% to 4,872 yen in Tokyo on Friday.
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