Toshiba plans to split into three, but rejects invitation to go private

A Toshiba unveiled plans this Friday (12) to split into three companies, with the aim of trying to appease activist shareholders calling for a radical overhaul of the conglomerate Japanese after years of scandals.

Founded in 1875, Toshiba plans to house its power and infrastructure divisions in one unit, while the hard-disk and power semiconductor divisions will form the backbone of another. A third will manage Toshiba’s stake in flash memory chip company Kioxia and other assets.

The plan came after a corporate governance scandal, partly designed to encourage activist shareholders to sell their stakes, sources familiar with the matter said.

The split, however, runs counter to calls from activists for Toshiba to go private, and some key shareholders have said they can challenge the plan.

“Shareholders have two options now: sell and leave and come back in two years or buy more shares and fight it. I’ll think about what to do,” said an investor who declined to be identified.

Toshiba released a separate report that found that its executives, including a former chief executive, had behaved unethically but not illegally.

The company said it is heavily dependent on the Ministry of Commerce and the problems were also caused by its “excessive caution” towards foreign funds and unwillingness to develop a strong relationship with them.

With the restructuring, Toshiba can return 100 billion yen ($875 million) to shareholders over the next two fiscal years.

The company said it intends to “monetize” its own actions Kioxia and return net income in full to shareholders as soon as possible, a change from the previous plan to return only the majority of profits.

Other assets that will continue to be owned by Toshiba include its stake in Toshiba Tec, a manufacturer of retail and print information systems.

Toshiba also reported that its Ebitda Q2 nearly doubled to 30.4 billion yen as it recovers from a fall caused by pandemic do coronavírus.