Japanese tech giant Toshiba to split; sell its stake in Carrier

TOKYO – Struggling Japanese tech giant Toshiba plans to split into two companies, one focused on infrastructure and the other on devices, in its latest effort to appease disgruntled shareholders.

Under the proposed plan, Tokyo-based Toshiba Corp. intends to sell its stake in the Toshiba Carrier Corp joint venture. to the American group Carrier, for approximately 100 billion yen (877 million dollars). Toshiba also sells Toshiba Elevator and Building Systems Corp. and Toshiba Lighting & Technology Corp., it announced Monday.

The proposal is still subject to shareholder and regulatory approval. Toshiba dropped its earlier three-way spin-off proposal, which was not popular with some shareholders.

Toshiba was once one of Japan’s most revered brands, but has been struggling since the Fukushima nuclear disaster in March 2011. A tsunami blew up three reactors, spewing radiation over an area that is still partly a prohibited. Toshiba is involved in the dismantling effort, which will take decades.

A d

The company’s reputation was also tarnished by an accounting scandal. Its chief executive resigned in 2015 to take on his responsibilities after company officials fiddled with the books for years after setting unrealistic profit targets.

Toshiba said it would provide 300 billion yen ($2.6 billion) of excess capital as shareholder return for two years.

Chief Executive Satoshi Tsunakawa acknowledged the announcement came after “further dialogue with key stakeholders”.

This includes foreign funds that opposed the previous restructuring plan.

The plan says Toshiba/Infrastructure Service Co., which includes its energy business, and Device Co., encompassing computer chips and storage, will be stand-alone companies with “separate visions.”

Atul Goyal, equity analyst at Jefferies, said the moves are a step in the right direction for Toshiba and called for swift action.

“These are encouraging signs,” he said, noting that the sale of non-core businesses can highlight “the company’s commitment to shareholder return.”

A d

If approved, the restructuring is expected to be completed by the second half of fiscal 2023. Toshiba expects to report a profit of 150 billion yen ($1.3 billion) for the fiscal year through March.


Yuri Kageyama is on Twitter: https://twitter.com/yurikageyama

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.