TOKYO, Japan: Toshiba Corporation announced on November 12 that it will split its business into three entities, a move that was intended to placate shareholders seeking a major overhaul of the company after several scandals.
An unusual step in a nation where corporations reign supreme, news of the Tokyo-headquartered company being divided came to light within days of American manufacturer General Electric declaring it was separating itself, while Johnson and Johnson made an announcement of a split.
Toshiba, founded in 1875, has agreed to join its infrastructure and energy units into a single business, with its hard disk drives and semiconductor devices used in power electronics forming a second company. The third unit will be responsible for the management of Toshiba Corporation's share in Kioxia Holdings, as well as other assets.
After a calculated evaluation of the company over a period of five months following an extremely scandalous corporate governance incident, the idea of separating the company was discovered to have colluded with the government to suppress the interests of foreign investors.
The division does not agree with the demands of some shareholders for taking the problem-ridden firm private. Some major shareholders believe that the plan could have difficulty getting approval at the March shareholders' meeting.
The re-organisation came after the closing of Japanese markets, though a four-percent fall in Toshiba shares was recorded on the Frankfurt Stock Exchange at opening on November 12, indicating discontent among investors.
After much discussion, Toshiba President Satoshi Tsunakawa said at a press conference that this strategic reorganisation was the best option.