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EDITORIAL | Delisting Toshiba is Necessary, Must Lead to Drastic Reforms

Toshiba owns power semiconductor, nuclear power, and other technologies important for national security. The new owners aim to keep those from leaking overseas.



Taro Shimada holds an online press conference after being appointed as president and CEO of Toshiba. (©Courtesy of Toshiba Corporation)

The curtain has fallen on the 74-year history of Toshiba as a publicly listed company. The venerable conglomerate is being taken private by a group of domestic investors. The group is led by the private equity firm Japan Industrial Partners. JIP, as it's known, aims to restructure Toshiba as a wholly owned subsidiary before relisting in a few years. 

The delisting was undertaken to eliminate the influence of activist investors, including overseas investment funds and other holders of Toshiba shares. JIP is aiming to provide management with more freedom of action. In addition, the management team has been shaken up. The new group of domestic owners has added six new directors.

Toshiba has continued to thrash about in recent years, as activist investors demanded short-term profit returns. That prevented the company from developing clear growth strategies. Now is the time to put an end to the years of management turmoil at Toshiba. 

Of course, even with the delisting, it will be challenging for Toshiba's management to turn the company around. 

Toshiba President Taro Shimada (right) and Chairman of the Board of Directors Akihiro Watanabe attend an online briefing session on September 7 in Minato-ku, Tokyo (provided by Toshiba)

Turning Toshiba to Profitability

The new collective of Japanese owners paid approximately ¥2 trillion JPY ($14 billion USD) to take the company private. Of this amount, ¥1.2 trillion JPY ($8.4 billion USD) will go to repay bank loan obligations. That means Toshiba will have to move quickly to increase its earning power. 

Since the accounting fraud scandal that surfaced in April 2015, Toshiba has taken steps to rehabilitate its devastated finances by successively selling off some of its better-performing businesses. For example, its semiconductor memories and medical equipment sales for the third quarter of 2023 were approximately ¥3.3 trillion JPY ($23 billion USD). That is only about half of what sales were before the fraud was discovered. 

Among Toshiba's remaining businesses, power semiconductors are being developed in collaboration with the major electronic components manufacturer and chipmaker ROHM. That company is also a member of the domestic consortium that has acquired Toshiba. Power semiconductors are a technology that can be expected to grow due to rising demand for improved energy-saving performance of electric vehicles (EVs) and other devices. 

Toshiba must now increase the competitiveness of its other businesses. 

The Toshiba logo is displayed near the building that houses the company's headquarters in Minato-ku, Tokyo (©Kyodo)

National Security at Stake

In addition to nuclear power plants, Toshiba possesses other important sensitive technologies related to national security. For example, those related to quantum cryptographic communications. Contributing to economic security by further refining these technologies while preventing them from leaking overseas should further enhance Toshiba's corporate value. 

There is a reason why Toshiba's management was in turmoil for eight years after the accounting fraud scandal was discovered. That is because its corporate governance had become dysfunctional.

By showing too much deference to the wishes of activist shareholders who opposed proposals related to the appointment of directors, the company lost the initiative regarding management. 

Going private will free Toshiba from shareholder pressures. Therefore, now is the time for it to implement drastic management reforms from a medium- to long-term standpoint. We hope that effective corporate governance will be established as soon as possible to ensure successful restructuring at Toshiba.


(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun

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