INSUBCONTINENT EXCLUSIVE:
The decision to split Toshiba's businesses "is a consequence of listening to activist shareholders"Toshiba plans to split into three
companies as early as 2023, a report said Tuesday, after a series of crises at the firm including the ouster of the board's chairman and a
contentious buyout offer.The Nikkei business daily said the three units would focus on infrastructure, devices and semiconductor memory and
are expected to be listed, possibly within two years.Toshiba told AFP the option of splitting its business up was under consideration but
said nothing had been decided.The Nikkei, which did not cite sources, said the move could be announced Friday when Toshiba reports
earnings."We are drafting a mid-term business plan to enhance our corporate value, and dividing our businesses is one of the options, but
that should be disclosed," he said.The decision, if confirmed, would cap a period of enormous upheaval for the firm, once a symbol of
Japan's advanced technology and economic power.In June, shareholders voted to oust the board's chairman after a series of scandals and
losses, in a rare victory for activist investors in corporate Japan.The move followed the damaging revelations of an independent probe that
concluded Toshiba attempted to block shareholders from exercising their proposal and voting rights.The investigation's report detailed how
the firm had pursued an intervention from Japan's Ministry of Economy, Trade and Industry to help sway a board vote.The revelations came
after an unexpected buyout offer in April from a private equity fund associated with then-CEO Nobuaki Kurumatani.The offer sparked uproar,
April, though he insisted it was not related to the buyout controversy.Damp SquibThe decision to split Toshiba's businesses "is a
consequence of listening to activist shareholders", said Hideki Yasuda, an analyst with Ace Research Institute.The move would be seen by
proponents as maximising the combined market value of Toshiba's operations.But he warned there could be downsides."You can't cover losses
in one business with profits in other businesses," making individual segments of Toshiba's operation potentially more vulnerable, he
said.The Nikkei noted that splitting up conglomerates had been a successful strategy for some firms in the United States, including
Hewlett-Packard.But for others such as chemical giant DuPont, which separated into three firms under shareholder pressure, overall market
capitalisation is now lower, the daily pointed out.The move is relatively rare in Japan, and Toshiba would be the first major conglomerate
to split into completely independent listed companies, the Nikkei said.Yasuda said Toshiba faces unique pressure from its shareholders,
putting it in a different position to other major Japanese companies.But, he added, "if (the split) proves to be successful, others would
follow suit".LightStream Research analyst Mio Kato said a move to split Toshiba's business suggested a lack of management, dubbing it a
"bit of a damp squib.""Given the intense pressure they have been under, we read this announcement as a signal that there just isn't massive
demand for Toshiba's assets," Kato wrote on independent investment research network site Smartkarma."The real worry here is if this is the
best management can come up with there is a very big disconnect between what management can deliver and what activists expect," he
added.Toshiba's shares ended down 2.61 percent in Tokyo, much more than the broader market.(Except for the headline, this story has not
been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
