Toshiba Corp said on Monday it will sell almost all of its 60% stake in its air conditioning unit to its US joint venture partner for $870 million – the deal coming ahead of a rejig of a contentious turnaround plan expected later in the day.
The sale of 55% of Toshiba Carrier to Carrier Global Corp is part of the Japanese conglomerate’s efforts to accelerate business divestitures and increase shareholder returns.
Toshiba is also set to unveil a plan to split into two companies, instead of an earlier announced three-way break-up, at the two-day meeting that starts today (February 7).
The plan, which it confirmed on Friday it is considering, is likely to face angry pushback from foreign hedge funds, many of whom would prefer that the company be taken private.
Under the new restructuring, Toshiba would split off its device business, including the power chip unit. Previously it had aimed to split into three – one for energy and infrastructure, one for devices and one for flash memory chips.
Two-Way Break-Up
The two-way break-up would save costs compared to a three-way split, although some investors suspect the new plan is designed to allow Toshiba to avoid a shareholder vote that would have required two-thirds approval.
An official at a top-15 shareholder, who declined to be identified, said on Friday he believed management had changed the plan to “suit themselves”. The two-way split would only require board approval under recent legislation designed to expedite the break-up of companies.
Break-ups require support of two-thirds of shareholders when the book value of the assets being spun off accounts for more than a fifth of the total assets.
Toshiba is nearly 30% owned by foreign funds, many of which appear to oppose the split. The two-thirds threshold could have forced the conglomerate to ditch its plan.
Toshiba management will brief investors on the break-up plan, take questions and give details on individual businesses.
- Reuters with additional editing by Sean OMeara
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