By Makiko Yamazaki and Satoshi Sugiyama
TOKYO (Reuters) – Toshiba said it intends to split into two companies instead of three, while showing a big boost to planned shareholder returns in an effort to appease investors angry at the company’s strategy.
However, his revised plan is still expected to face a lot of resistance from foreign hedge funds, many of which are opposed to any sort of split and prefer the scandal-ridden Japanese conglomerate closed.
Under the new restructuring, Toshiba will only spin off the devices area. The previous plan called for a three-way split: one company for devices, one for the energy and infrastructure business, and another to house flash memory chip assets.
Toshiba also aims to raise shareholder returns to 300 billion yen ($2.6 billion) over the next two years, up from its previous target of 100 billion yen. The conglomerate’s shares closed up 1.6% after the news.
Toshiba argued that the new plan is simpler, will save costs and make it easier to seek alliances with strategic partners.
The company aims to complete the spin-off and listing of the devices unit by March 2024. The deal is expected to record 860 billion yen ($7.5 billion) in net sales and 55 billion yen in operating profit in the year ending March. .
Toshiba also said on Monday it would put its elevator and lighting businesses up for sale and added that it no longer sees Toshiba Tec, which makes copiers and point-of-sale systems, as a core business.
Earlier in the day, Toshiba announced that it would sell almost its entire 60% stake in the air conditioning unit to US partner Carrier Global for $870 million.
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