Volkswacht Bodensee - Toshiba unveils new plan to split into two companies

The group said it plans to spin off its device segment, including the semiconductor business, in a bid to speed up decision-making and boost stock performance.

Shareholders, who have clashed with management on the best way forward for the troubled company, must still approve the proposal in a vote expected in March.

Last year, Toshiba said it would split into three companies in a move that analysts called a test case for other Japanese giants.

"Since this is the first large-scale spin-off transaction in Japan... it turned out there were obstacles which were not initially expected," Toshiba said Monday, referring to the original proposal made in November.

It has since decided that a two-way split "can significantly reduce separation costs, secure financial soundness for each company, and significantly reduce spin-off uncertainty".

Toshiba said it aims to complete the split in the second half of the 2022-23 financial year.

Other multinational giants including General Electric and Johnson & Johnson have also announced plans in recent months to split into multiple companies -- a move analysts say is in large part forced on them by financial markets.

Spinoffs can be a way for large corporations to create more value when share prices are buoyant, such as during the Covid-19 market rally last year.

Toshiba's latest plans cap years of turmoil for the group, which dates back to 1875 and was once a symbol of Japan's advanced technological and economic power.

Last year, shareholders voted to oust the board's chairman after a series of scandals and losses, in a rare victory for activist investors in corporate Japan.

The company also on Monday announced plans to sell air-conditioning subsidiary Toshiba Carrier to the US-based Carrier Corporation in a deal reportedly worth some 100 billion yen ($867 million).

The conglomerate currently owns 60 percent of the air-con company's shares and will retain only five percent when the sale is completed later this year.

In a statement, Toshiba said it hoped the sale would allow Toshiba Carrier to "realise its full growth potential" as global demand for cooling systems grows.

It is not the only interest Toshiba is looking to shed, according to Nikkei Asia, which reported that the group is also mulling the sale of Toshiba Elevator and Building Systems Corp, and Toshiba Lighting & Technology.

L.Janezki--BTB