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Bidding Nearing End on Sale of Toshiba Medical Device Unit

March 4, 2016



Battle-weary Toshiba is barreling toward the finish line in a sale of its medical device unit, and fellow Japanese device maker Fujifilm could emerge the winner in a potential $6 billion deal.

The second round of bidding for Toshiba’s medical equipment unit closes Friday and the company will select a bidder as early as next week to enter exclusive talks, The Wall Street Journal reports. If and when this happens, Fujifilm could have an edge over another top bidder, Canon ($CAJ), people familiar with the matter told the newspaper.

Even though Canon and Fujifilm are both making attractive offers, Fujifilm wants to buy a 100% stake in Toshiba Medical Systems. And Toshiba execs see more synergies in a deal with Fujifilm, two sources told the WSJ. The companies share more suppliers in common, and “the offer price isn’t everything,” one of the sources said.

 Still, Toshiba needs some serious cash to allay its financial woes. The sale, which is meant to help the company recover from a previous accounting scandal, could bring in about ¥700 billion ($6.1 billion). Toshiba last month estimated a loss of ¥710 billion for its fiscal year ending in March 2016.

That’s not to mention the company’s debt. Toshiba is asking major creditors for about ¥200 billion in loans, and proceeds from a sale of its medical device unit could relieve some financial stress.

Last year, Toshiba said that it would sell a controlling stake in its medical device business in an attempt to recoup from an accounting scandal, in which the company was accused of overstating profits.

At the time, about a dozen companies and investment firms expressed interest in making an offer for Toshiba Medical. A third group comprising Japanese imaging company Konica Minolta and U.K. private equity fund Permira could also pull up a seat at the table in the second round of bidding, sources told the WSJ.

Whoever emerges the victor will inherit Toshiba’s imaging devices for CT scans, MRIs, ultrasounds and X-rays. Toshiba Medical brought in ¥405.6 billion for the financial year ending in March 2015. The company’s market capitalization as of Thursday’s close was ¥840 billion, which shows that Toshiba’s medical unit may account for most of its value to shareholders, the WSJ points out.

Meanwhile, the company under CEO Masashi Muromachi is concentrating on restructuring to regain momentum. In December, Toshiba said that it would lay off 6,800 employees to lighten its load amid widening losses.

Source: Beleaguered Toshiba eyes Fujifilm for sale of medical device biz: WSJ – FierceMedicalDevices

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