Unlocks Value, Focused & Agile Management, and Enhances Choices for Shareholders
Board Unanimously Approves the Separation Plan as Recommended by the Strategic Review Committee as the Best Path Forward For Toshiba and Its Shareholders Following the Committee’s Evaluation of a Wide Range of Options
First-Ever Spin-Off Scheme For a Japanese Company of This Size
Toshiba Corporation announced its intention to separate into three standalone companies:
“Committed to People, Committed to the Future”
- Infrastructure Service Co.1, consisting of Toshiba’s Energy Systems & Solutions, Infrastructure Systems & Solutions, Building Solutions, Digital Solutions and Battery businesses;
- Device Co.2, comprising Toshiba’s Electronic Devices & Storage Solutions business; and
- Toshiba, holding its shares in Kioxia Holdings Corporation (KHC) and Toshiba Tec Corporation (TOKYO: 6588).
The separation will create two distinctive companies with unique business characteristics leading their respective industries in realizing carbon neutrality and infrastructure resilience (Infrastructure Service Co.), and supporting the evolution of social and IT infrastructure (Device Co.). The separation allows each business to significantly increase its focus and facilitate more agile decision-making and leaner cost structures. As such, both companies will be much better positioned to capitalize on their distinct market positions, priorities and growth drivers to deliver sustainable profitable growth and enhanced shareholder value. At the same time, Toshiba intends to monetize shares in Kioxia while maximizing shareholder value and return the net proceeds in full to shareholders as soon as practible to the extent that doing so does not interfere with the smooth implementation of the intended spin-off.
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The Company will utilize the tax-qualified spin-off structure via the recent tax reform legislation in Japan, in a first for a company of Toshiba’s size. Toshiba is taking a bold step to unlock substantial value, creating more focused investment opportunities for shareholders and delivering additional benefits for customers, business partners employees, and its broader stakeholder community.
This separation plan, which has been unanimously approved by Toshiba’s Board, follows a review of a wide range of strategic options by the Board’s Strategic Review Committee (“SRC”), comprising five Independent Outside Directors. During its review, the SRC sought input from shareholders on the Company’s strategic direction and held discussions with a number of potential partners.
Based on the thoroughness of the nearly five months review, Toshiba’s management team and Board of Directors are confident that the intended separation into three standalone companies is the best path to enhance shareholder value.
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Satoshi Tsunakawa, Interim Chairperson, President and Chief Executive Officer of Toshiba, said: “Over our more than 140 year history, Toshiba has constantly evolved to stay ahead of the times. Today’s announcement is no different. In order to enhance our competitive positioning, each business now needs greater flexibility to address its own market opportunities and challenges. We are convinced that the business separation is attractive and compelling: it will unlock immense value by removing complexity, it enables the businesses to have much more focused management, facilitating agile decision making, and the separation naturally enhances choices for shareholders. Our Board and management team firmly believe that this strategic reorganization is the right step for sustainable profitable growth of each business and the best path to create additional value for our stakeholders. We are grateful for the Strategic Review Committee’s thorough evaluation and recommendation on our best path forward.”
Paul J. Brough, Independent Director, Chairperson of Toshiba’s Strategic Review Committee, said: “We are pleased to share this bold and ambitious plan to deliver enhanced value for Toshiba’s shareholders and other important stakeholders. The SRC recommended to the Board that separating the Company into focused businesses is the best path forward for Toshiba and its shareholders following a thorough evaluation of value-enhancing options over nearly five months.”
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