Image source, Reuters

Toshiba Corporation, the Japanese conglomerate Toshiba, confirmed its plans to seperate the company into three businesses.

Toshiba stated that the companies will be focusing on semiconductors, infrastructure and devices.

Activist investors are putting increasing pressure on the company to change since 2015’s accounting scandal.

General Electric, the US’s largest company announced this week a similar strategy. The historic company will be liquidated.

Toshiba will spin off its two main businesses, its infrastructure and energy unit and its storage and device operation.

Toshiba will retain a 40% stake in Kioxia, the memory chipmaker.

The company expects to finish the restructuring by the end of the second-half of 2023.

Following shareholder pressure, Toshiba has decided to boost the stock markets valuations of all its businesses.

Analysts are worried about when the changes will take place.

Atul Goyal from Jeffries investment bank said, “The movement is in good direction, but seems slow.” He preferred that there be a three to six month timeline.

“2023” is still far away and it’s not clear what other changes will occur between now, and then.

Toshiba is Japan’s oldest, largest company. It has divisions that cover everything from electronic home appliances to nuclear power stations.

The company’s recent history has seen it go through difficult changes, including the aftermath of an accounting scandal as well as huge losses related to the US nuclear facility.

Hisao Tanaka was the then-chief executive, president and CEO of Toshiba. Toshiba had claimed that it had misrepresented its profits by $1bn.

CVC Capital Partners, a UK-based private equity firm, made an unannounced $20bn bid to buy Toshiba in April.

Nobuaki Kurumatani, chief executive of the company, resigned a week later amid scandal over the deal.

CVC rejected Toshiba’s offer. This angered activist shareholders.

Osamu Nagayama, chairman of the company’s shareholders revolted in June and he was forced from his post.

General Electric, a US multinational conglomerate, announced Tuesday that it will split into three companies.

Company officials stated that it would spin off its health care business early in 2023, and combine the fossil-fuel power and digital assets into one company. This company will go public next year. The rest of the business will go to GE Aviation, a jet engine maker.

It marks the dissolution of Thomas Edison’s famous manufacturer. It grew into a huge business empire and was the once-most valuable company in the world.

Toshiba was founded in the 1870s. It has been a symbol for Japan’s economic recovery since World War Two.

This company has been a major player in Japan, from electronics to coal and nuclear power stations.

It admitted in 2015 that it overstated its profits six years ago, which made it emblematic of many scandals plaguing Japan Inc.

In 2018 it sold its memory chip company, crown-jewels, to avoid bankruptcy.

The board announced today that it would split into three companies. This marks the end to an era. However, it also highlights activist investors’ growing influence after they defeated the chairperson of the board in June.

Japan is not known for its conglomerate splitting strategy. It remains to be seen if the Japanese will accept it and, more important, whether or not it will satisfy activists investors.


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