TOKYO • Japan's Toshiba yesterday offered camera maker Canon exclusive rights to buy its medical devices unit, as the engineering giant sells businesses to recover from a major accounting scandal.
The proposal from Canon is superior to others and the exclusive rights will last until March 18 as the companies work towards reaching a final agreement, Tokyo-based Toshiba said in a statement.
The announcement comes as Toshiba expects a whopping loss of about US$6 billion (S$8.3 billion) for the year to March due to sagging global demand and a spectacular profit-padding scandal, in which high-handed bosses for years systematically pushed their subordinates to cover up weak financial figures.
In the wake of the scandal, Toshiba - a vast conglomerate that makes everything from rice cookers to nuclear plants - has ushered in thousands of job cuts and plans to sell various business units in a bid to revive itself.
Toshiba said in a release that it has given Canon the exclusive right to negotiate for a majority share in Toshiba Medical Systems, which is the world's second-largest manufacturer of computerised tomography (CT) scan machines and also makes X-ray and magnetic resonance imaging (MRI) systems.
Canon also produces printers and other office equipment.
The sale is part of a drastic restructuring at Toshiba after the company admitted to overstating profits from 2009. The costs of the revamp have forced Toshiba to ask lenders for additional loans of about 200 billion yen (S$2.5 billion), sources have told Reuters.
Toshiba declined to comment on the size of Canon's bid, although reports said it was more than 700 billion yen. Canon also declined to comment.
The Nikkei business daily said Canon had won prime position to take the unit, not only because of the size of its bid but also because there was little overlap between the two firms' medical equipment businesses, raising few antitrust concerns.
"The acquisition of Toshiba Medical will allow Canon to create a new business pillar, on top of cameras and office equipment businesses," said Mr Kazuyoshi Saito, senior analyst at IwaiCosmo Securities. "It might be a little pricey, but will generate profits in the first year."
The sale is attracting a bevy of suitors, particularly Japanese imaging companies.
The second round of bidding, which saw offers go much higher than first estimated, included Fujifilm Holdings, and Konica Minolta, which had teamed up with European buyout firm Permira, sources familiar with the matter said earlier.
Many Japanese high-tech companies are rushing to enter the medical field, as a greying population boosts demand for healthcare services and tools.
Sony launched a medical joint venture with endoscope maker Olympus, which also went through a massive loss-hiding scandal and required a strong partner to rebuild itself.
AGENCE FRANCE-PRESSE, REUTERS
This article was first published on March 10, 2016.
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