A new story published this week by Reuters is raising questions about how Japanese industrial conglomerate Toshiba handled the sale of its Toshiba Medical Systems unit to Canon.
The April 25 article claims that Toshiba structured the sale "in an unorthodox way" so it could book $6 billion in proceeds before the deal had been approved by Japanese regulators. Toshiba sold the medical unit to a Canon holding company with just $300 in capital that was formed specifically for the purposes of the transaction, the Reuters article claimed.
The deal's structure was questioned shortly after it was announced, in particular by Fujifilm Holdings, which was outbid by Canon for the medical business. Fuji raised doubts about whether Toshiba could complete the sale in time for proceeds to be recognized in Toshiba's just-concluded 2015 fiscal year, which ended March 31. Toshiba reported on March 17 that it had completed the deal.
Toshiba sold the medical business to raise cash in the wake of an accounting scandal that saw its levels of shareholder equity plummet. In addition to selling the medical business, Toshiba also divested its home appliance business to a Chinese appliance manufacturer.
On April 26, Toshiba released guidance for its year-end financial results, saying it expects to post an operating loss of 690 billion yen ($6.2 billion), higher than the previously forecast loss of 430 billion yen ($3.86 billion). The company also announced that it expects to post a write-down of goodwill amounting to 260 billion yen ($2.3 billion) connected to its Westinghouse nuclear power business, in which Toshiba bought a stake in 2006.
