Toshiba plans to split into two instead of three and offload its air-conditioning business, the Japanese industrial conglomerate said on Friday, in a bid to overcome shareholder opposition to its turnaround plan.
The changes would mark the latest twist in Toshiba’s long battle with foreign shareholders, many of whom are activists and hedge funds, and highlight the once mighty conglomerate’s struggle to revive itself after a dramatic fall from grace.
The Nikkei earlier reported that Toshiba will sell its 60% stake in Toshiba Carrier to its US counterpart Carrier Global for about 100 billion yen ($870 million or about Rs.6,480 crore), adding that the two companies have reached to an agreement.
Since announcing the three-way split in November, Toshiba has reviewed the details of the strategic reorganization and continued to review its portfolio, the company said in a statement.
The reported changes “remain strategic options for Toshiba,” he said, adding that he would explain the details during investor briefings on Monday and Tuesday.
Under the new plan, Toshiba would discontinue its device business, including the power chip unit, the Nikkei said. Previously, he had planned to split into three companies: one for energy and infrastructure, one for devices and one for flash memory chips.
By splitting into two, Toshiba will save more money than it can return to shareholders, according to the newspaper.
No need for two-thirds approval
A two-way spin-off could be carried out with board approval under recently revised legislation to speed up spin-offs when the book value of assets to be divested is worth less than one-fifth of a company’s total assets.
The three-way split would have required the support of two-thirds of shareholders, as the assets of the new energy and infrastructure company would represent more than one-fifth of the total.
Given that Toshiba is almost 30% owned by foreign funds, many of which appear to oppose the split, the 67% mark could have forced the conglomerate to abandon its plan.
One of the 15 largest shareholders said he believed management had changed the plan to a two-way split to “suit each other”.
“It’s no wonder shareholders are talking about a lack of trust or a management culture that avoids accountability,” said the shareholder, who spoke to Reuters on condition of anonymity. .
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