Japan Toshiba "Intensive Restructuring After Delisting... Integration of Four Main Subsidiaries"

Energy, Infrastructure, Semiconductor Devices, and IT Integration

Japan Industrial Partners (JIP) succeeded in the tender offer for Toshiba shares, leading to Toshiba's sale and confirming its delisting within the year. Going forward, Toshiba has announced plans to consolidate its subsidiaries, which led its four main business sectors, with the headquarters and undertake intensive restructuring.

[Image source=Reuters Yonhap News]

On the 22nd, Nihon Keizai Shimbun (Nikkei) reported that Toshiba plans to merge its four major subsidiaries with the headquarters after its delisting in December. Accordingly, the existing four subsidiaries in ▲energy including power plants and nuclear power ▲infrastructure such as railroads ▲power semiconductor devices ▲IT systems will be absorbed into the headquarters, and intensive restructuring of overlapping departments is expected, Nikkei reported.

Nikkei stated, "Discussions on the absorption merger have begun within the company, targeting 2 to 3 years from now," and "Negotiations with JIP will be intensified after the delisting," adding, "Toshiba will incorporate the four subsidiaries into the headquarters and integrate previously separate departments such as human resources and finance."

Previously, Toshiba spun off its businesses in 2017 aiming for growth, but this led to strong vertical segmentation in each business and a lack of cross-departmental digitalization, which was evaluated as causing inefficiency. As a result, overlapping investments and maintenance costs significantly increased, which has been pointed out as one of the main causes of Toshiba’s severe losses.

Through this intensive restructuring, Toshiba plans to lay the foundation for relisting. Earlier, Toshiba’s market trust had significantly declined due to various scandals, including accounting fraud in 2015 and the discovery of huge losses at its U.S. nuclear subsidiary in 2016.

A Toshiba official told Nikkei, "We aim to relist within about five years from going private," and added, "First, we will break down the walls between the four businesses where segmentation problems are most apparent and promote efficiency so that all areas including sales, development, and production can be crossed."

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