'Taegeukgwa Jipjung' Toshiba to Reduce Split Corporations from 3 to 2 Amid Major Shareholder Opposition

The Scale of Shareholder Returns Expanded Threefold

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Japanese comprehensive electronics company Toshiba has revised its plan to split into three corporations by business sector to enhance corporate value through selection and concentration. Instead, it will split only the device business responsible for semiconductors, leaving the infrastructure services business within the existing Toshiba corporation, resulting in a division into two corporations. This revision came after shareholder opposition continued since the initial split plan was announced last November, aiming to reduce costs and increase shareholder benefits.

According to the Nihon Keizai Shimbun on the 7th, Toshiba announced that it would revise the split plan accordingly. Toshiba operates businesses including power generation equipment, transportation systems, elevators, hard disk drives (HDD), and semiconductor memory. Previously, it had planned to reorganize into three sectors: infrastructure, devices, and semiconductor memory.

With this revision just two months later, the business will be split into only two sectors: infrastructure and devices. The device sector will handle power semiconductors that supply and control electricity and hard disk drives (HDD), while the existing Toshiba corporation will manage power generation equipment, infrastructure facilities, and shares of Kioxia Holdings, a memory semiconductor company. The timing of the split remains as initially announced, between October 2023 and March 2024.

The Nihon Keizai Shimbun reported, "Some major shareholders opposed the announced plan," adding, "With this revision, the number of companies to be separated and made independent is reduced, lowering administrative work and listing procedure costs compared to the original plan. These savings will be allocated to growth investments and shareholder returns." This indicates that opposition from major shareholders such as the hedge fund 3D Investment Partners, a major shareholder of Toshiba, significantly influenced the revision of the split plan.

Accordingly, Toshiba also announced that it would expand its shareholder return policy from the initially planned 100 billion yen (approximately 1.04 trillion won) over the next two years to around 300 billion yen. It also stated plans to request an early initial public offering (IPO) of Kioxia and to allocate all funds raised through this to shareholder returns.

On the same day, Toshiba also decided to sell 55% of its air conditioning subsidiary Toshiba Carrier to the American air conditioning giant Carrier Global for 100 billion yen. It plans to sell its elevator and lighting businesses as well, and designated Toshiba Tec, a subsidiary operating the POS (point of sale) system business, as a non-core business.

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