In surprise move, Toshiba CEO resigns amid opposition to restructuring plans

TOKYO, March 1 - Toshiba Corp said on Tuesday Chief Executive Satoshi Tsunakawa is resigning - a sudden departure that comes after sources said internal opposition to the industrial conglomerate's controversial restructuring plans grew.

Toshiba's shares surged 3% on what was seen as a significant changing of the guard among management. Senior executive Taro Shimada, a former Siemens AG executive, who only joined in 2018, will become the new interim head of the company effective Tuesday.

Toshiba's initial plan to split the conglomerate into three had been much criticized by foreign hedge fund shareholders. But a revised plan last month that called for a breakup into two companies and the sale of other businesses also met with opposition from within the company, according to two sources familiar with the matter.

The sources were not authorized to speak to media and declined to be identified.

TOSHIBA NOW PLANS TO SPLIT INTO TWO, BOOSTS SHAREHOLDER RETURN TARGETS

Asked about internal opposition, Toshiba said it firmly believes its announced reorganization plan is the best option for the company but declined to comment further.

For some observers, the surprise move throws doubt upon whether Toshiba will be able to press ahead with recently revised plans to break up.

"The split plan will be reviewed - we think there is a chance it is scrapped," said Justin Tang, head of Asian research at investment advisor United First Partners in Singapore.

TOSHIBA IN TALKS WITH FOUR INVESTMENT FIRMS FOR STRATEGIC IDEAS

Toshiba also said that Mamoru Hatazawa, corporate senior executive vice president and a board member, will also resign, while Goro Yanase, the head of Toshiba's elevator business, will be appointed interim chief operating officer.

The board will monitor performance and the status of business execution and "where appropriate, the board will continue its deliberations, toward appointing external candidates," it added.

While Tsunakawa had stepped back into the CEO role on an interim basis and had said he did not expect be in the position on a long-term basis, the timing of the announcement was a surprise.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

A Toshiba spokesperson said the company had made decisions about new appointments now as it wanted shareholders to be clear about who would be leading the company ahead of a March 24 extraordinary general meeting that will seek initial shareholder approval for the revised breakup plan.

Shareholders will also vote on a major shareholder's proposal that Toshiba explore other options and solicit buyout offers from private equity firms.