The Japanese technology group Toshiba wants to split into three listed companies. The long-established company announced this. Under strong pressure from foreign shareholders, the group, which has been stumbling for a long time, hopes to use this step, unprecedented for Japan, to strengthen profitability in key areas in the future. The group, founded in 1875, is one of the best-known names in the Japanese economy. However, the disastrous foray into the US nuclear power business and a balance sheet scandal brought Toshiba to the brink of the abyss in the middle of the last decade.
As part of a medium-term business plan, the area for infrastructure and electronic products is to be spun off into separate companies. Toshiba would then remain the semiconductor memory business. Just a few days ago, the US industrial group General Electric (GE) announced that it would also split into three companies. GE and Toshiba have long been partners and cooperate in areas such as offshore wind turbines. At General Electric, companies for aviation, medicine and another company are to be created in the future, which will cover the business of renewable energies, energy generation and digitization.
With the split now also planned at Toshiba, the Japanese corporate conglomerate is responding to growing demands from activist shareholders for transparency and efficiency. In June, an independent investigative body found that Toshiba managers were collaborating with the Department of Economy, Trade and Industry to prevent foreign shareholders from influencing the board of directors by sending directors. Two top managers then had to vacate their posts. CEO Satoshi Tsunakawa had justified the relationship with the ministry with the fact that Toshiba’s business is important for the national security of Japan. Toshiba went “too far”, however.
Foreign shareholders hold a large part of the shares in Toshiba. In a report presented on Friday, the group admitted that top managers such as former boss Nobuaki Kurumatani have violated business ethics by kinking with the powerful industry ministry, but they have not violated any laws. Toshiba has been accused of being overly dependent on the ministry and having excessive reservations about overseas mutual funds. Kurumatani abruptly resigned in April in connection with internal disputes over a multi-billion dollar takeover bid by British financial investor CVC Capital Partners.