Will Toshiba split up?

11 March 2022

After years of scandal, struggles with finding its electronics footing and the departure of several senior executives, Japanese tech conglomerate Toshiba Corp. announced plans in late 2021 to split the company into various parts to salvage its business.

Originally, the idea was the split the company into three parts: One business focused on printers, barcodes and point of sale tech; another would be Toshiba’s semiconductor business; and the third would encompass power generation and transmission, renewable energy and public infrastructure.

However, this plan was abandoned after investors objected, calling it another example of management getting it wrong, according to The Register. This led Toshiba to rethink its break-up approach as two entities to offer better returns.

The company has called for an emergency shareholder meeting that will vote on the opposition to the break-up plan called by major shareholders as well as a separate vote to authorize the split on March 24.

That meeting has gained traction after Satoshi Tsunakawa, CEO of Toshiba, resigned as a move of opposition to the plan to break-up the 100-year-plus conglomerate.

Shareholders, including 3D Investment Partners which submitted the separate proposal to not split the company, want Toshiba to explore other options and solicit buyout offers from private equity firms and potential strategic buyers, according to Reuters.

Fuel for the meeting was given this week after Effissimo Capital Management, which owns a 10% stake in Toshiba, said it would vote against the break-up plan saying the Toshiba management is incapable of creating a strategic plan that does not damage Toshiba’s value.

That value has already been halved over the last few years to $18 billion, down from its peak in the early 2000s.

Another shareholder, Institutional Shareholder Services (ISS), also advised against the break-up plan but also does not support the proposal from 3D Investment Partners, calling it premature.

Toshiba, meanwhile, said it would make every effort to gain the support of its shareholders but so far it appears the company has a long way to go.

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