Japanese conglomerate Toshiba has confirmed plans to separating the company into three separate business units. Toshiba said the three companies would focus on infrastructure, semiconductors, and devices.
After an accounting scandal in 2015, the company came under increasing pressure from activist investors to make changes. This week, American giant General Electric announced a similar strategy that would lead to the historic collapse of the company.
Toshiba’s plan will divide the company into two primary businesses – energy and infrastructure units and device and storage operations. After the sale of the two companies, Toshiba will continue to hold a 40.6% stake in memory chip maker Kioxia and other assets. The reorganization should be completed in the second half of 2023.
The move aims to increase market valuation for Toshiba’s various businesses following pressure from shareholders. However, some analysts are concerned about the timing of the change.
“This move is in the right direction, but it seems slow,” said Atul Goyal of investment bank Jeffries. Which prefers a three to six-month schedule. Toshiba is one of Japan’s oldest and most prominent companies, with businesses ranging from household electronics to nuclear power generation.
However, the company has faced fallout from accounting scandals and heavy losses related to its nuclear facilities in the US in recent years.
In 2015, then-CEO and President Hisao Tanaka stepped down after Toshiba said it overstated its profits by more than $1 billion. In April this year, British private investment group CVC Capital Partners submitted an unsolicited takeover bid for Toshiba for $20 billion.
A week later, the company’s CEO Nobuaki Kurutani resigned in a dispute over the offer. Toshiba later rejected CVC’s offer, which angered some shareholder activists. In June, President Osamu Nagayama was ousted after a shareholder rebellion.
On Tuesday, US company General Electric announced that it would split into three separate companies. The company announced it will split its healthcare business in early 2023 and combine renewable energy. Fossil fuels, and digital entities into one company scheduled to split up next year. The remaining business is engine manufacturer GE Aviation.
This move marks the disintegration of the iconic manufacturer founded by Thomas Edison. Then it grew into a thriving business empire that was once the most valuable company in the world.