Tokyo (AFP) – Announced Japan’s Toshiba Corporation Today, Monday, it plans to split into two companies, following it previously raised controversy by proposing to split into three companies following a difficult period faced by the prestigious industrial group. The group stated that it intends to separate its hardware division, including its semiconductor-related business, in an effort to speed up decision-making processes and improve its performance in the stock exchange. Shareholders, who have disagreed with management over the best way forward for the struggling company, have yet to approve the proposal in a vote expected next month. The first partition plan encountered significant opposition from some of the most important investors. The company also stated that it will sell its stake in Toshiba Carrier, which specializes in air conditioning, and will also sell the elevators and lighting units. “We believe that splitting is the best solution,” CEO Satoshi Tsunakawa told investors, vowing that it would “leave room for more flexible operations.” He pointed out that the large-scale group suffered in the past from “a decrease in its (market) value because it is a conglomerate and the slowness in making decisions,” stressing that simplifying operations will allow investors to choose the part of their business that interests them. And “Toshiba” had previously revealed a plan to split into three companies last November, as part of what analysts described as a test whose results might benefit other giant Japanese companies. But today, she said, “Since this is the first large-scale split in Japan… obstacles have arisen that were not initially expected,” including higher-than-expected costs and a difficult process for listing the two new entities on the stock exchange. The company believed that a split into two companies “can significantly reduce separation costs and maintain the financial soundness of each company, and significantly reduce the uncertainty associated with the split.” The split is expected to cost 20 billion yen ($173 million) over two years, while operating costs will increase by 13 billion yen each year. But Tsunakawa pointed out that plans to reduce operating costs by 30 billion yen annually will make up for this. The Japanese giant is seeking to complete the separation process in the second half of the 2022-23 fiscal year, but the matter may face opposition from shareholders. General Electric and Johnson & Johnson have announced splits in recent months, a move analysts said were largely forced by financial markets. Experts say that divisions may be a way for large companies to increase their value and rationalize their operations, but they can also limit coordination between divisions. Toshiba was founded in 1875 and was a symbol of Japan’s technological progress and economic strength, but it has been facing great difficulties for years. Shareholders voted last year to dismiss the chairman following a series of scandals and losses.
