Toshiba to Split Business Into Three Amidst Crises Buyout Offer

Toshiba plans to split into three companies in 2023 after a series of crises at the company, including the CEO firing and a controversial buyout offer, according to a report released on Tuesday.

According to Nikkei Business Daily, the three units will focus on infrastructure, equipment and semiconductor storage and are expected to be added to the list over the next two years.

Toshiba told AFP it was considering splitting up its business but had not yet made that decision.

The Nikkei, who was not quoted, said the move could be announced on Friday as Toshiba reports profits and launches a new mid-term business plan.

“We are preparing a medium-term business plan to increase the value of our company and segmenting our business is an option, but nothing has been officially made at this point,” Toshiba spokesman Tatsuro Oshi told AFP.

“If there is a decision, we will announce it as soon as possible,” he said.

If the decision is correct, the company that was once a symbol of modern technology and the power of the Japanese economy will experience tremendous upheaval.

In June, a rare win for active investors in Japan, shareholders voted to remove the CEO after a series of scandals and losses.

The move was followed by devastating disclosures by an independent investigation that concluded that Toshiba was trying to prevent interest groups from exercising their voting rights.

The investigative report describes how the company intervened by the Japanese Ministry of Economy, Trade and Industry to influence the opinion of the board of directors.

The revelations came after an unexpected purchase offer in April from a private equity fund owned by then-CEO Nobuaki Kurutani.

The proposal contradicts claims that activists seek to undermine investor influence.

Then another offer came along, and Kurutani withdrew in April despite insisting that it was not a buying dispute.

Hideki Yasuda, an analyst at the S Research Institute, said the decision to split Toshiba’s business was “the result of advocacy hearings by activists.”

His case backers are working to make an actual copy of this statement available online.

However, he warned that there could be drawbacks.

“As long as you maximize market value … you can’t offset losses in one business with gains in another,” he said, potentially making Toshiba’s personal space more vulnerable.

The Nikkei noted that splitting was a successful strategy for several companies in the United States, including Hewlett-Packard.

But for others, such as chemical giant DuPont, which split into three companies under pressure from shareholders, total market capitalization is now low, the daily said.

This move is relatively rare in Japan and Toshiba will be the first major company to split into a fully independent publicly traded company, the Nikkei said.

Yasuda said Toshiba is under unique pressure from its shareholders, which puts it in a different position from other large Japanese companies.

But, he added, “if (the split) proves successful, others will follow.”

Toshiba shares were up more than two percent in early Tokyo trade, but ended in negative territory in the morning.