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  • Voltaire Staff

Toshiba downs curtains on 74-year run with delisting

Image Courtesy: Unsplash

After a decade marked by financial turbulence and management scandals, Toshiba Corporation announced the delisting of the company shares,

bringing a closure to the firm's 74-year presence on the Tokyo exchange.

The Wednesday delisting signifies the completion of a buyout and leaves Toshiba facing an unpredictable and ambiguous future.

Toshiba, a Japanese multinational conglomerate, played a pivotal role in the technological landscape for over seven decades. Established in 1875, the company initially focused on telegraph equipment before diversifying into various sectors.

Over the years, Toshiba became a global leader in electronics, renowned for innovations such as the world's first laptop in 1985. However, all along its trajectory to becoming a global hardware giant, the firm faced significant challenges, including a major accounting scandal in 2015 that led to a series of sell-offs and financial difficulties.

As reported by BBC News, the troubles for Toshiba began in 2015 when it was revealed that the company had engaged in accounting malpractices across various divisions, implicating top management.

Over seven years, Toshiba overstated its profits by $1.59 billion. In 2020, more accounting irregularities came to light, coupled with allegations regarding corporate governance and shareholder decision-making processes.

In 2021, an investigation uncovered a collusion between Toshiba and Japan's trade ministry to suppress the interests of foreign investors, creating uncertainty for investing in Japanese stocks beyond Toshiba.

Toshiba faced financial challenges in 2016 due to the construction of a nuclear power plant by its US unit, Westinghouse Electric, which led to Westinghouse filing for bankruptcy, leaving Toshiba with over $6 billion in liabilities.

To address financial strains, Toshiba sold off various businesses, including mobile phones, medical systems, and white goods.

The chip unit, Toshiba Memory, was also put up for sale.

In 2017, Toshiba secured a $5.4 billion cash injection from overseas investors, preventing a forced delisting but giving activist shareholders more influence. This led to prolonged battles over the company's direction.

In June 2022, Toshiba received eight buyout proposals and confirmed it would be taken over by a group of Japanese investors, led by state-backed Japan Investment Corp (JIC), for $14 billion.

The company's future under new ownership remains uncertain, but outgoing chairman mentions a focus on high-margin digital services. The move puts Toshiba under Japanese ownership after facing challenges from foreign activist investors.

Reportedly, Chief Executive Taro Shimada, who remains in his role, is expected to prioritise high-margin digital services. JIP's support for Shimada led to a change in plans, as their earlier collaboration with a state-backed fund was derailed. Some industry insiders suggest that splitting up Toshiba might be a better option.

According to a Reuters report, Damian Thong, head of Japan research at Macquarie Capital Securities, maintains that Toshiba's challenges stemmed from a combination of poor strategic decisions and bad luck. He hopes that divestitures will allow Toshiba's assets and talent to find new opportunities.

Four JIP executives, along with representatives from Orix and Chubu Electric, are slated to join the board. The new management team will also include a senior adviser from Toshiba's main lender, Sumitomo Mitsui Financial Group.

Toshiba has already taken steps in collaboration with investor Rohm, investing $2.7 billion in manufacturing facilities to jointly produce power chips. To improve its position, the company aims to exit lower-margin businesses and develop stronger commercial strategies for its advanced technologies.

The Japanese government is closely monitoring the situation, considering Toshiba's significance with around 106,000 employees and operations critical to national security


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