Toshiba is set to split into two companies instead of three as it aims to garner support from shareholders to transform its business.
The plan will see the company spin off its Toshiba Energy Systems and Solutions, Infrastructure Systems and Solutions, and Battery business to make an Infrastructure Co., including its stake in Kioxia Holdings. The rest will form Device Co., consisting of Toshiba’s Electronic Devices and Storage Solutions business. The Device Co.’s official name will be announced once the spin-off is complete.
Toshiba said the decision to separate into two independent companies was the result of the board of directors’ continued and thorough review of the strategic reorganisation plan and process, as well as the company’s extensive engagement with shareholders, regulators, and other stakeholders.
The company determined that the fastest, most effective, and efficient way to deliver sustainable profit growth, shareholder value, and compelling benefits was to proceed with the separation into two standalone companies.
“After further engaging with key stakeholders and completing the additional analysis, we determined that separating Toshiba into two standalone companies and divesting certain non-core assets is in the best long-term interests of our company and its shareholders, customers, business partners and employees,” said Satoshi Tsunakawa, interim chairperson, president, and CEO of Toshiba.
The reorganisation of Toshiba’s business remains on track to be completed in the second half of the 2023 fiscal year, said the company. It still needs approval from Toshiba’s general shareholder meeting before it can happen.
Last Friday, the company also announced it would construct a new 300-millimetre wafer plant for semiconductors to double its production capacity of these components. It is investing around 125 billion yen ($1.09 billion), according to Reuters, and the plant is set to start operating by March 2025, to help it compete with its power giant competitors.
Today’s announcement to split the company into two entities differs from what Toshiba said in November when it planned to split its business into three. The spin-off plans were the result of an investor-commissioned review into the management of the Japanese company, following a number of scandals. It previously declared that the spin-off was needed as part of a bid to add more value for its shareholders.
