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

Wed Mar 9, 2016 4:41am EST
 
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By Junko Fujita and Makiko Yamazaki

TOKYO (Reuters) - Toshiba Corp (6502.T: Quote) has granted Canon Inc (7751.T: Quote) exclusive negotiating rights for its medical equipment unit after a hotly contested auction, with a report putting Canon's offer at more than $6 billion.

The conglomerate put Toshiba Medical Systems Corp on the block to help fund restructuring after a $1.3 billion accounting scandal, attracting a bevy of suitors, particularly Japanese imaging companies seeking to expand beyond cameras to more lucrative products and services.

The second round of bidding, which saw offers go much higher than first estimated, included Fujifilm Holdings Corp (4901.T: Quote), and Konica Minolta Inc (4902.T: Quote) which teamed up with European buyout firm Permira, sources familiar with the matter said earlier.

The Nikkei business daily said Canon had won prime position to take the unit, not only because its bid topped 700 billion yen ($6.2 billion), but also because there was little overlap between the two firm's medical equipment businesses, raising few anti-trust concerns.

Canon and Toshiba declined to comment on the size of the offer.

"I think the bid is clearly positive for Toshiba if the number is right," said Damian Thong, a Macquarie Group analyst who previously assumed the unit to be worth no more than 400 billion yen.

"It would be a good way to shore up its equity capital base which would be otherwise be a concern for lenders and investors," he said.

Toshiba last year admitted to overstating profits from 2009, and is asking lenders for additional loans of about 200 billion yen ($1.8 billion), sources have told Reuters.   Continued...

 
The logo of Toshiba Corp is seen at the company's news conference venue in Tokyo in this May 17, 2012 file photo. REUTERS/Yuriko Nakao/Files