Toshiba to sell its medical imaging business to Canon for $6B amid deepening accounting scandal

Infinix-i X-ray angiography system--Courtesy of Toshiba

Toshiba agreed to sell its medical imaging unit to Canon ($CAJ) for ¥666.5 billion ($5.97 billion) as it seeks to recover from an ever-worsening accounting scandal.

The price tag and buyer were as expected, for the process was drawn out. But the importance of the cash lifeline was heightened by news that the U.S. Securities and Exchange Commission is investigating the company for hiding $1.3 billion in losses at its nuclear power business, according to Bloomberg.

Toshiba's stock fell 8% on the revelation. It's down 64% since its 2014 peak due to various other accounting mishaps, which have led to the need for the conglomerate to slim down.

With earnings of ¥23.9 billion ($210 million) on net sales of ¥412.5 billion ($3.69 billion), Toshiba Medical Systems is a bright spot for the struggling company. It garnered interest from multiple companies and private equity firms, as well as competing bids from fellow Japanese titans Fujifilm Holdings and Konica Minolta.

Initial estimates were that the sale of the entire unit would fetch around $4 billion.

Toshiba Medical Systems consists of imaging devices for CT scans, MRIs, ultrasounds and X-rays, according to the company website. It leads the Japanese imaging market with a 30% share, and is fourth worldwide, with a global market share of 10%, Nikkei Asian Review previously reported.

Although most famous for its cameras, Canon's medical device offerings include radiography devices, mobile X-ray machines, fluoroscopy devices and optical coherence tomography equipment for eye care, according to the company website.

It was chosen as the exclusive negotiator for Toshiba Medical Systems earlier this month over Fujifilm Holdings. Following the deal's announcement FujiFilm sent a letter to Toshiba inquiring about the sale over concerns it was rushed so that the transaction can be completed by the end of the company's fiscal year, which ends in March.

"We are left with an impression that the deal went through a process that was exceedingly tricky and aimed at buying time," Fujifilm spokesman Takao Aoki told Bloomberg. "If this is to be accepted, this raises concerns that competition laws are just a facade."

The deal also calls for Toshiba Medical Systems to pay ¥22.5 billion ($200 million) to Toshiba's U.S. holding company for the rights to Toshiba America Medical Systems.

Toshiba also said it has come a preliminary agreement to sell its consumer electronics business to China's Midea Group as it narrows its focus to nuclear power plants and flash memory chips.

It expects to post a net loss of ¥710 billion ($6.36 billion) for the fiscal year ending in March.

- here's the release
- here's more from Bloomberg | here's the latest on the accounting scandal from Bloomberg