As Kobe Steel Reels, Even Breaking Up Company May Not Be Enough
The headquarters of Kobe Steel in Hyogo prefecture.
Kobe Steel Ltd.’s deepening crisis around fudged data across a swathe of metals products could mean that even a breakup of the company isn’t enough to salvage value for shareholders, according to Alexander Robert Medd, managing director at Bucephalus Research Partnership Ltd.
Jefferies Group LLC has said splitting the producer along business lines could be a way for the 100 year-old company to weather the scandal, with Japan’s No. 2 steelmaker, JFE Holdings Inc., touted as a possible buyer of its steel assets. Medd, though, isn’t sure that would be enough, as Kobe contends with new revelations of misconduct in its core business, which accounts for about a third of revenue.
“I am very concerned that if the business is broken up, their assets may not cover all of their liabilities,” Medd said by email from Hong Kong. “We think that they have been under-depreciating their assets. This will come out in a trade sale and I suspect will lead to write offs.”

Kobe’s shares have plunged 41 percent this week, including a 8.2 percent drop on Friday, after it revealed on Sunday that it had fudged data on the strength and durability of metals supplied to as many as 200 customers around the world, including Toyota Motor Corp., General Motors Co. and space rocket-maker Mitsubishi Heavy Industries Ltd.
Chief Executive Officer Hiroya Kawasaki is scheduled to hold another briefing in Tokyo on Friday evening to disclose more findings from the company’s investigation into the scandal.
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