Toshiba has officially decided to split itself up into two smaller companies after months of internal wrangling.
The two standalone companies, both of which will be publicly traded, will be: Infrastructure Service, which covers energy, transportation, batteries, and other areas; and Device, which covers digital devices, semiconductors, and storage.
As Bloomberg reports, the original plan – which faced opposition from shareholders – was to separate out its infrastructure operations, which will now instead continue under Toshiba.
Onwards and upwards
The iconic Japanese company has been under increasing pressure over recent years after a series of scandals and mismanagement. An expansion into nuclear power, for example, forced the company into selling its crown jewel semiconductor business.
“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 Toshiba CEO Satoshi Tsunakawa.
“The refined strategic reorganization plan creates two distinctive companies that are well-positioned to take advantage of their unique strengths and business cycles,” he continued. “We will be able to deliver these benefits while providing a clearer path to completion, reducing the associated costs, maintaining tax-free status and keeping to our stated timeframe of completing the spin-off in the second half of FY2023.”
Investors greeted the news with approval, including firms that had build up considerable positions to affect change at Toshiba. 3D Investment Partners, which owns a 7.6% stake, pushed for a split into three companies to require a two-third majority.
Over the coming years, Toshiba plans to return ¥300 billion (around $2.6 billion) to shareholders as part of the plan. The company will also sell a 55% stake in its air conditioning business to a US group for around ¥100 billion (around $870 million).
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