TOKYO: Toshiba Corp. said Friday that it will split itself and group businesses into three independent companies, a very rare move for a major Japanese firm to completely break up into several firms.

The conglomerate plans to create two new firms by spinning off two core businesses — infrastructure such as power generation, and devices including power semiconductors. It aims to take the two firms public in the fiscal second half starting in October 2023.

Toshiba will continue to exist as a company holding shares of chipmaker Kioxia Holdings Corp. and being in charge of brand management.

Under pressure from activist shareholders to increase returns, Toshiba aims to improve corporate value through the reorganization.

At a virtual press conference, Toshiba President and CEO Satoshi Tsunakawa said that the reorganization is “not dismantlement but evolution toward the future.” He said, “We’ll aim to have the new infrastructure and devices firms become leading companies in each industry.”

Toshiba will ask for shareholder approval of the reorganization plan between January and March. If the plan is approved, existing Toshiba shareholders will be given shares in the two spinoff firms.

The infrastructure business is expected to log sales of 2.09 trillion yen in the year through next March. Toshiba aims to invest 483 billion yen in the business to realize annual sales of 2.23 trillion yen in the year ending in March 2024.

The devices business is projected to have sales of 870 billion yen in the year ending in March 2022. Toshiba aims to boost the figure to 880 billion yen in two years by enhancing the competitiveness of semiconductors.

Toshiba, which owns a stake of about 40 pct in Kioxia, said it plans to sell the shares at an early date and provide Toshiba shareholders with all of the proceeds. The company previously said it would give a majority of the proceeds to shareholders.

In the first half ended in September, Toshiba’s consolidated net profit climbed to 59,795 million yen from 3,493 million yen a year before as sales rose 12.8 pct to 1,546,397 million yen on robust demand for semiconductors and large-capacity hard disk drives mainly for data center use.

JIJI Press