Toshiba proposes historic break-up plan amid pressure from activist shareholders
Toshiba is breaking up its empire and is splitting into three separate companies amid growing pressure from activist investors.
The Japanese giant will house its hard drives and semiconductors in one company, and its energy and infrastructure holdings in another.
It’s 40.4 per cent stake in flash-memory chip company Kioxia Holdings will form the basis of a third business.
The decision follows a five-month strategic review, as the 146-year old conglomerate has lurched from crisis to crisis since an accounting scandal in 2015.
Two years later, the struggling company secured a $5.4 billion boost from 30-plus overseas investors to avoid a delisting.
This included activist shareholders such as Elliott Management, Third Point and Farallon.
Tensions between the activists and the board have dominated its media coverage ever since, culminating in the ousting of chairman Osamu Nagayama in June.
He was voted out in a shareholder revolt after the company colluded with the Japanese government to suppress the interests of foreign investors.
The break-up plan is potentially a fresh attempt by the Japanese giant to encourage the investors to leave.
The activists have instead reportedly been pushing for the company to go private, a stance not favoured by Toshiba due to a lack of compelling private equity offers and antitrust issues.
Toshiba hopes to complete the reorganisation by the second half of 2023.
It is unclear how the activists will respond to the break-up at the extraordinary general meeting scheduled next March.
The decision follows Johnson & Johnson deciding to split their company in two, as conglomerates look to adapt to an evolving market.