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Highlights
- Toshiba Corp announces its plan to split into three companies by 2023.
- A similar announcement came forward from General Electric Co. this year.
- The final plan to split is yet to be disclosed by Toshiba.
Following the path of General Electric Co (GE), Toshiba Corp announces its plan to split into three companies by 2023. The step has been undertaken as the company encountered a crisis due to a corporate governance scandal. The split will help ease the pressure of activists shareholders and improve the shareholders‘ value at the same time.
As per Nikkei Asia, three companies will focus on memory chips, infrastructure and devices separately. A spokesperson also highlighted that Toshiba Corp would list the three companies within the next two years.
The infrastructure and nuclear power division will form one company, and hard disk drive and power chips will form another company. The third company will have an approximately 40% stake in Kioxia Holdings Corp., an unlisted memory chipmaker.
Toshiba has not disclosed the exact plan as of now, and the complexity is added to the plan because of the involvement of Toshiba in national security, defence contracting and nuclear power.
Toshiba has been in controversy since 2015 when it had to pay the country’s highest tax penalty as it was dragged into an accounting scandal. Santoshi Tsunakawa, CEO of Toshiba stated that this strategy would ensure its competitiveness and help address the challenges in its unique way.
Bottom Line
The decision to split into three has been interpreted as a forward-looking effort by Toshiba, and the company is yet to disclose its complete and confirmed plan on this. Therefore, it is not the right time to comment upon whether the decision will create shareholder’s value or downgrade it.
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