Another two global conglomerates kick off plans to split: Johnson & Johnson and Toshiba announce break-ups
Another two global conglomerates have kicked off plans to break up.
US group Johnson & Johnson and Japanese industrial titan Toshiba announced their splits days after another American firm, General Electric, unveiled a similar strategy.
Johnson & Johnson will break into two companies in the next 18 months to two years, it said.
Breaking up: Johnson & Johnson will break into two companies in the next 18 months to two years
It will separate its consumer healthcare unit, which makes plasters and talcum powder, from its much larger pharmaceuticals arm.
The healthcare company will then be floated on the stock market.
Chief executive Alex Gorsky said the break-up was ‘the best path forward to ensure sustainable growth over the long term’ for Johnson & Johnson, whose history dates back around 135 years.
Toshiba, meanwhile, will split into three independent companies, ending years of calls from shareholders for a radical overhaul in the wake of a series of crises that began with an accounting scandal in 2015.
The 146-year-old firm makes everything from TVs to nuclear power plants. It now intends to house its energy and infrastructure work – including water treatment, trains and power turbines – while a second company will focus on electronic devices.
A third will manage its stake in a flash-memory chip group, Kioxia Holdings, as well as other assets.
Toshiba’s plan follows a five-month review. Bosses considered whether to take the £13.8billion firm private, and it received – and rejected – a buyout offer from CVC Capital Partners in April. But chief executive Satoshi Tsunakawa said: ‘After much discussion, we reached the conclusion that this strategic reorganisation was the best option.’
It comes days after the 129-year-old US industrial giant General Electric said it too would break up into three firms, all to be listed on the stock market. One will make jet engines, a second will produce electrical systems and turbines, and a third will specialise in healthcare kit.
Previously the biggest company in the world, it is now worth around £88billion, well behind tech giants such as Tesla, Apple and Amazon.
It follows years of turmoil and falling profits at the group, whose history can be traced back to when Thomas Edison invented the light bulb.
The spate of break-ups has led to speculation that more groups could pursue the same strategy. There are few major conglomerates left. Those remaining including Warren Buffett’s Berkshire Hathaway and India’s Tata.