Toshiba is set to divide itself into three companies to focus on infrastructure, devices, and semiconductor memory as early as 2023, Nikkei has learned, APA reports.
All three are expected to be listed at some point. The move is part of Toshiba’s strategy to strengthen shareholder value by creating independent companies that have different profit structures and growth strategies.
Japanese electronics companies, with their wide range of businesses from power stations to home appliances, used to be a growth engine for the country. Toshiba had been a star among those companies and a move like this by such a prominent entity is unprecedented.
However, Toshiba has been disadvantaged by a so-called conglomerate discount, as investors tend to value a diversified group of businesses and assets at less than the sum of its parts because of a wider range of risks and a perceived reduction in capital efficiency.
Toshiba wants to incorporate the new plan into its mid-term management strategy to be unveiled on Friday.
Toshiba has its fingers in many pies – from the operation of nuclear and thermal power plants to transportation systems, from the manufacture of elevators to the production of air conditioners, hard disc drives and semiconductors.
These businesses earned 200 billion to 800 billion yen annually and brought in total revenue of 3.5 trillion yen ($30.8 billion) in the fiscal year that ended in March.
Under the new plan, Toshiba’s power stations business will be operated by an infrastructure company while hard disc drive business will be run by a device company, for example.
A company owned by Kioxia Holdings, in which Toshiba has a 40% stake, is expected to operate its semiconductor memory business. However, it is also possible that its semiconductor business could be integrated into the company that oversees devices.
Toshiba shareholders are expected to be allocated shares in the new separate entities.
