TOKYO Reuters - Japanese industrial conglomerate Toshiba Corp is set to outline plans on Friday to break up into three listed companies that will focus on infrastructure, devices and memory chips, sources with knowledge of the matter said.
The plan is designed to improving shareholder value and encourage activist shareholders to exit, according to a strategic review undertaken after a highly damaging corporate governance scandal.
The sources who were not authorized to speak to media and declined to be identified said the review calls for its nuclear power and infrastructure-related divisions to be housed under one company while its power chips and hard disk drive divisions would form the backbone of another, said the sources who were not authorized to speak to media and declined to be identified.
The company will own Toshiba's 40.6% stake in unlisted memory chipmaker Kioxia.
The three-way split was one option under consideration by Toshiba this week. The strategic review, second-quarter earnings and the conclusions of a corporate governance report were declined to give immediate comment on Friday ahead of a series of announcements that include the strategic review, second-quarter earnings and the conclusions of a corporate governance report.
Some Toshiba investors are not certain that a break-up would create value, according to shareholder sources, declining to be identified ahead of a formal announcement of the plan.
It makes sense to split if the valuation of a highly competitive business is hindered by other businesses, said Fumio Matsumoto, chief strategist at Okasan Securities.
If there isn't such a business, the break-up creates three lacklustre midsize companies. The once-storied 146-year-old conglomerate has been stuck from crisis to crisis since an accounting scandal in 2015. Two years later, it secured a $5.4 billion cash injection from 30плюс overseas investors that helped avoid a delisting but brought in activist shareholders including Elliott Management, Third Point and Farallon.
The investigation concluded that Toshiba had colluded with Japan's trade ministry to block investors from gaining influence at last year's shareholders meeting.
The analysts estimates show that Toshiba is expected to report an operating profit of 37.7 billion yen for the July-September quarter, up from 15.8 billion yen a year earlier, according to a average of six analysts estimates compiled by Refinitiv.