Toshiba unveils new plan to split into two companies

TOKYO: Japan’s Toshiba announced plans to split into two companies, revising a controversial proposal to divide into three following a tumultuous period for the storied industrial conglomerate.

The group said it plans to spin off its device segment, including its semiconductor business, in a bid to speed up decision-making and boost stock performance.

Shareholders, who have clashed with management over the best way forward for the troubled company, will still have to approve the proposal in a vote expected in March. The original spin-off plan was strongly opposed by some key investors.

The firm also said it would expand its air conditioning business to Toshiba carriers and seek to sell its elevators and lighting units.

We believe the spin-off is the best,” President and CEO Satoshi Sonakawa told investors, promising that it would “enable more agile and flexible operations.”

He said the sprawling business “struggled with the conglomerate discount and slowness in decision-making” in the past, and streamlining operations would allow investors to choose the portion of the business that interested them.

Toshiba initially unveiled a plan to split into three last November, in what analysts called a test case for other Japanese giants.

But it said Monday that “since this is the first large-scale spin-off transaction in Japan…it turned out there were obstacles which were not initially expected”.

Among those were higher-than-expected costs, and an extensive process to list the two new entities.