To enable the two-way split, the Japanese conglomerate will divest certain non-core assets, including its stake in the Toshiba Carrier air conditioning business
Toshiba building in Osaka, Japan. (Credit: Tokumeigakarinoaoshima/Wikimedia Commons)
Toshiba has decided to split into two standalone companies instead of an earlier announcement of reorganising itself into three entities with an aim to boost shareholder value.
The Japanese conglomerate had revealed its spin-off plans in November 2021. Since then, the group is said to have been in talks with a range of stakeholders, which include shareholders and relevant authorities.
Toshiba said that after consulting with related parties about the spin-off, the group found that there were obstacles to its plan, which were not expressed initially.
The two new standalone companies will now be Toshiba/ Infrastructure Service and Device Co.
Toshiba/ Infrastructure Service will include the group’s energy systems and solutions, infrastructure systems and solutions, digital solutions and battery businesses apart from its ownership stake in computer memory manufacturer Kioxia.
Device Co. will hold the group’s electronic devices and storage solutions business, which recently announced plans to build a 300mm wafer fabrication facility in Ishikawa, Japan. Official name of this company will be announced after the completion of the spin-off.
To enable the two-way split, the Japanese group said that it will divest a majority of its 60% stake in its Toshiba Carrier air conditioning business to Carrier, its US joint venture partner, for JPY100bn ($870m).
The Japanese conglomerate is also going ahead with divestiture plans for Toshiba Elevator and Building Systems and Toshiba Lighting & Technology, which it considers to be non-core assets.
Toshiba interim chairperson, president, and CEO said: “After further engaging with key stakeholders and completing the additional analysis, we determined that separating Toshiba into two standalone companies and divesting certain non-core assets is in the best long-term interests of our Company and its shareholders, customers, business partners and employees.
“The refined strategic reorganisation plan creates two distinctive companies that are well-positioned to take advantage of their unique strengths and business cycles.”
The spin-off is expected to be completed by the second half of the fiscal year 2023.