Canon closes in on Toshiba's medical unit after fierce bidding

People walk past a Canon logo in Tokyo, Japan, October 27, 2015. REUTERS/Toru Hanai/Files

TOKYO: Toshiba Corp has granted Canon Inc exclusive negotiating rights for its medical equipment unit after a hotly contested auction, with a report putting Canon's offer at more than 700bil yen (RM25.65bil). 

The conglomerate put Toshiba Medical Systems Corp on the block to help fund restructuring after a US$1.3bil (RM5.35bil) accounting scandal, attracting a bevy of suitors, particularly Japanese imaging companies whose products range from cameras and copiers to diagnostic devices. 

The second-round of bidding, which saw offers go much higher than first estimated, included Fujifilm Holdings Corp, and Konica Minolta Inc which had teamed up with European buyout firm Permira, sources familiar with the matter said earlier. 

Toshiba Medical, the world's second-largest manufacturer of CT scan machines, also makes X-ray and magnetic resonance imaging (MRI) systems. It had revenue of 405.6bil yen (RM14.86bil) in the past financial year. 

Toshiba declined to comment on the size of Canon's bid. 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 firm's medical equipment businesses, raising few antitrust concerns. 

Canon has been keen to develop its medical devices business and the purchase would jump start that effort. 

"The acquisition of Toshiba Medical will allow Canon to create a new business pillar, on top of cameras and office equipment businesses," said Kazuyoshi Saito, senior analyst at IwaiCosmo Securities Co. 

"It might be a little pricey, but will generate profits in the first year. It is more reasonable than Hon Hai paying about the same for Sharp," he said. 

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 200bil yen (RM7.32bil), sources have told Reuters. — Reuters

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