Toshiba to split into three companies after years of scandal

• Toshiba’s spilt comes in the same week as of GE and J&J

• Toshiba plans to complete the overhaul by March 2024

Toshiba Corp on Friday announced to split into three companies as it was under pressure from activist investors demanding change in the company after years of scandal.

The Japanese conglomerate’s split comes at the same week when U.S. industrial conglomerate General Electric and Johnson & Johnson announced their split.

Toshiba plans to divide the conglomerate in an energy and infrastructure company, hard disk drives and power semiconductor company and while the third company will manage Toshiba’s stake in flash-memory chip company Kioxia Holdings.

Also Read: Johnson & Johnson to split into two publicly traded firms

Toshiba plans to complete the overhaul by March 2024.

Investors’ demand

The plan was announced after markets closed in Japan but Toshiba’s Frankfurt-listed shares fell 4% at market opening, which indicates investor disappointment.

Activist investors have urged to take the company private while some shareholders said the plan may not be approved in the general meeting in March.

Strategic review committee of Toshiba said going private would impact its businesses and staff retention. It also said offers from private equity firms were not compelling.

Also Read: General Electric to split into three companies

The company said that private equity firms had raised concerns regarding completing deal due to possible conflicts from Japan’s national security law.

"After much discussion, we reached the conclusion that this strategic reorganisation was the best option," Chief Executive Satoshi Tsunakawa told a news conference.

Picture Credits: Reuters