(Tokyo) Japanese industrial and tech conglomerate Toshiba confirmed on Friday that it plans to split into three independent companies within two years, as the group has long been pressed by its shareholders to maximize its value.
Two new companies are expected to be created and floated on the stock market, one bringing together Toshiba’s energy and infrastructure activities, and the other in electronics and data storage, according to a statement.
The third company would be formed by the rest of Toshiba, to manage the approximately 40% share that it currently holds in Kioxia, a Japanese memory chip giant, and its shares in its separately listed subsidiary Toshiba Tec (office equipment and systems). for retail).
“In order to improve our competitiveness, each of our businesses now needs greater flexibility to seize the opportunities and meet the challenges of their respective markets,” said Toshiba CEO Satoshi Tsunakawa, quoted in the statement.
This split “will unleash immense value by removing complexity, allowing activities to have a tighter direction and making decision-making easier,” he added.
This project, unanimously approved by members of the board of directors of Toshiba, had leaked in the Japanese press on Tuesday and aroused mixed reactions.
A trendy strategy
According to Financial Times Friday, investors representing around 30% of Toshiba’s capital considered the proposal disappointing. Many of them hoped that the group would instead seek to be redeemed.
The project must be validated by Toshiba shareholders at an extraordinary general meeting between April and the end of June 2022, with a view to completing the split in the second half of its 2023/24 financial year.
This project is the result of “the strong pressure” exerted by the many activist shareholders of Toshiba, who have been demanding for years that the group is active to improve its corporate value, insufficient in their eyes, recalled Friday at the AFP Mio Kato, LightStream Research analyst posting on the Smartkarma platform.
However “from an operational point of view, I do not think it will make a big difference” because it all depends on the quality of the leaders of a company, estimated this analyst.
Splits are a trend now: the US conglomerate General Electric also announced this week that it will split its activities into three separate companies.
Governance crisis
A former Japanese industrial and technological flagship, Toshiba has lost a lot of its luster since a huge make-up scandal of its accounts revealed in 2015. The group then found itself on the brink after the bankruptcy of its American nuclear subsidiary Westinghouse in 2017.
To survive, Toshiba had to sell many assets including its pearl Toshiba Memory, its chip-memory entity bought in 2018 by a consortium led by the American fund Bain Capital for about 18 billion euros and renamed from Kioxia.
More recently, Toshiba has also experienced a deep governance crisis. Its chief executive officer Nobuaki Kurumatani and then its chairman Osamu Nagayama were sacked this year under pressure from shareholders, who were very upset about the murky methods of management to ensure the vote of its resolutions during the group’s ordinary general meeting in 2020.
Toshiba officials indicted by an independent investigation into the 2020 GA case, including Mr Kurumatani, “did not act illegally” but “violated ethical rules,” a Toshiba report released on Friday concluded. .
The group is currently looking for a new CEO as well as a new chairman, Satoshi Tsunakawa being only interim CEO.
Toshiba also released its results for its first half of 2021/22 (April-September 2021) on Friday, with a net profit of 59.8 billion yen (458 million euros), a very strong rebound over one year.
Its half-year operating profit stood at 45 billion yen and sales at 1,546.4 billion yen (11.8 billion euros), up 12.7%.
Its forecast for annual net profit rose from 110 billion yen to 130 billion yen, which would represent an increase of 14% year-on-year.
Toshiba left its annual operating profit target unchanged at 170 billion yen but raised its revenue forecast to 3.350 billion yen (25.7 billion euros), which would mean an increase of 9.7% on a year.