Embattled Japanese technology giant Toshiba plans to split into two companies, one focused on infrastructure and the other on devices, in its latest effort to placate unhappy shareholders.
As part of the proposed plan, Tokyo-based Toshiba Corp. intends to sell its joint venture stake in Toshiba Carrier Corp. to the U.S.-based Carrier Group, for about 100 billion yen ($877 million). Toshiba is also selling Toshiba Elevator and Building Systems Corp. and Toshiba Lighting & Technology Corp., it said Monday.
The proposal is still subject to shareholder and regulatory approval. Toshiba scrapped its earlier proposal for a three-way split, which was not popular with some shareholders.
Toshiba once was one of Japan's most revered brands but has been struggling since the Fukushima nuclear disaster in March 2011. A tsunami sent three reactors into meltdowns, spewing radiation over an area that's still partly a no-go zone. Toshiba is involved in the decommissioning effort, which will take decades.
The company's reputation also was tarnished by an accounting scandal. Its chief executive resigned in 2015 to take responsibility after company officials doctored accounting books for years, having set unrealistic earnings targets.
Toshiba said it will provide 300 billion yen ($2.6 billion) of excess capital as shareholder returns for two years.
Chief Executive Satoshi Tsunakawa acknowledged the announcement came about after further engaging with key stakeholders.
That includes foreign funds that objected to the earlier restructuring plan.
The plan says that Toshiba/Infrastructure Service Co., which includes its energy businesses, and Device Co., encompassing computer chips and storage, will be stand-alone companies with distinct visions.
Atul Goyal, an equity analyst at Jefferies, said the moves are a step in the right direction for Toshiba, and urged speedy action.
These are some encouraging signs, he said, noting that selling non-core businesses can highlight the company's commitment to shareholder returns.
If approved, the restructuring is to be completed by the second half of fiscal 2023. Toshiba is expecting to report a 150 billion yen ($1.3 billion) profit for the fiscal year through March.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU