Toshiba last week selected Canon as the exclusive partner with which it would negotiate a divestiture of the division. Toshiba has been under pressure to raise cash in the wake of an accounting scandal that has erased billions in shareholder value and will cause the company to report a massive loss for the current financial year.
Toshiba has been pushing to complete the divestiture quickly to ensure that proceeds from the sale fall into the current fiscal year. With the March 17 announcement, Toshiba reported that it has transferred all shares of Toshiba Medical Systems to Canon, and the division is no longer a Toshiba subsidiary.
The deal is still subject to approval by Japanese regulatory authorities, however, and the medical business will only become a Canon subsidiary when approval is granted.
Toshiba selected Canon among a raft of suitors that also included Fujifilm Holdings, parent company of Fujifilm Medical Systems. Both Fuji and Canon were seen as being anxious to buy the Toshiba Medical business as part of ongoing efforts to diversify outside of their declining consumer businesses.
But Canon may have had an edge, as it already had existing ties with Toshiba: Canon holds 6.4 million shares of Toshiba stock, and Toshiba sells Canon semiconductor products such as memory chips and integrated circuits.
Toshiba Medical Systems was formally launched in 1948 and has roots in x-ray going all the way back to 1914, when it began research into x-ray tube technology. The company has evolved into one of the top four multimodality OEMs in radiology, with the largest share of the Japanese market for medical imaging equipment.
In conjunction with the Canon announcement, Toshiba released financial results for the division that indicate revenues and net income dipped in its most recent financial year.
|Toshiba Medical Systems financial results, 2012-2014
In a news release of its own, Canon said that it intends to grow its activities in the healthcare sector as part of its five-year strategic plan launched this year to transform the company. In particular, it plans to use Toshiba's position in imaging diagnostics to further reinforce the subsidiary's operational strength in in vitro diagnostics and healthcare IT through mergers and acquisitions and other strategic investments. It also expects improvements in Toshiba Medical's medical equipment business by accessing Canon's business portfolio and partnerships.
Canon also sees synergies by merging its own expertise in x-ray digital detector technology with Toshiba Medical's R&D capabilities; this should result in innovative new products and services in the future, Canon said.
In a separate announcement, Toshiba said it plans to sell its consumer electronics business to Chinese manufacturer Midea, which will continue to sell Toshiba-branded products such as refrigerators, washing machines, vacuum cleaners, and other small domestic appliances. News reports indicate that Toshiba plans to use proceeds from the medical and consumer electronics sales to focus on its nuclear reactor and flash memory businesses.
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