Toshiba to sell its medical unit to Canon

TOKYO • Canon has agreed to buy Toshiba's medical equipment unit for 665.5 billion yen (S$8 billion) as the world's biggest maker of cameras seeks new growth.

The deal will be funded by existing cash and borrowings, Tokyo- based Canon said in a statement yesterday. The agreement comes a day after unsuccessful bidder Fujifilm questioned Toshiba about the sale.

Toshiba, which makes everything from nuclear power equipment to laptop computers, flash memory chips and home appliances, is seeking to revive profits by narrowing the scope of its business lines. 

An accounting scandal has left the Japanese conglomerate in tatters, facing record losses, job cuts and potential spin-offs.

Yesterday, the company also made a deal with Midea Group, China's biggest maker of home appliances, for a majority stake in Toshiba. The two firms signed a memorandum of understanding, the Japanese company said in a statement yesterday.  

Toshiba, which makes everything from nuclear power equipment to laptop computers, flash memory chips and home appliances, is seeking to revive profits by narrowing the scope of its business lines.

Canon is buying a business that makes diagnostic imaging systems such as MRI, X-ray and ultrasound equipment.

It would also take the company into competition with General Electric, Royal Philips and Siemens for MRI machines that typically cost more than US$100,000 (S$135,000) each.

Canon is diversifying as smartphones with increasingly advanced cameras eat into its business. The company also makes printers, fax machines and projectors while its existing healthcare business includes radiography and ophthalmic equipment, according to its website.

"There is no reason to believe that the selection process wasn't fair and that Canon is paying an unfairly low price," said Mr Damian Thong, an analyst at Macquarie Group.

Toshiba is seeking to raise money as it deals with the fallout from an accounting scandal. The Tokyo-based company granted Canon exclusive negotiation rights on March 9, passing over Fujifilm. Another bidding group led by Konica Minolta was dropped after it offered less than was being sought.

Mr Masashi Muromachi, Toshiba's president, is divesting the medical unit, cutting jobs and considering a reorganisation of its personal computer and TV operations as the company forecast a record loss for the fiscal year.

Toshiba's healthcare division, which includes medical equipment and other businesses that Toshiba does not plan to sell, had sales of 409.5 billion yen in the previous fiscal year ending March 2015 and operating income of 23.9 billion yen, according to data compiled by Bloomberg.

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A version of this article appeared in the print edition of The Straits Times on March 18, 2016, with the headline 'Toshiba to sell its medical unit to Canon'. Print Edition | Subscribe