The constant bombardment of active shareholders is having an effect: the Japanese conglomerate Toshiba seeks to split itself into three parts and thus create a blow of liberation. But not all investors are convinced.
Japanese tech giant Toshiba The long-established company is looking to split into three companies, it announced on Friday. By 2023, the energy, infrastructure and digital businesses on the one hand and the semiconductor and hard drive division on the other are to be split and listed separately on the stock exchange, Toshiba announced Friday.
This leaves the core business with a 41 percent stake in the printer division (Toshiba Tech) and memory chip maker Kioxia. Toshiba also wants to monetize the latter. Most of the subsidiary, which was spun off in 2018, is with financial investor Bain Capital.
Toshiba apparently wants to get rid of obnoxious shareholders
The demerger scheme is the result of a five-month strategy review following a reputed management scandal. According to insiders, Toshiba expects active shareholders such as Elliott, Third Point and Farallon to exit. The company on Friday said the divestiture is about creating value for shareholders. But according to shareholder circles, some Toshiba investors are not convinced.
“When a highly competitive business is being undervalued by other businesses, a divestiture makes sense,” said Fumio Matsumoto, chief strategist at Okasan Securities. “But if no such business exists, you can create only three medium-sized companies with one division.”
Tensions have been brewing between the board of directors and shareholders over the years
The 146-year-old group has been moving from crisis to crisis since an accounting scandal in 2015. Two years later, Toshiba secured a capital raise of $5.4 billion from more than 30 foreign investors — but it also added active investors.
Tensions between him and the board of directors have made headlines ever since. Shareholders forced an investigation, which concluded in June that Toshiba and the Commerce Department had worked together to prevent foreign investors from influencing last year’s annual general meeting.
Toshiba said after further investigation that the managers around the former CEO acted unethically, but not illegally. The report complains that it is too dependent on the commerce ministry. Problems also arose from “over-anxiety about foreign funds” and “lack of desire to develop a meaningful relationship with them”.
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