Canon Inc. agreed to buy Toshiba Corp.’s medical equipment unit for ¥665.5 billion ($5.9 billion) as the world’s biggest maker of cameras seeks new growth.
The deal will be funded by existing cash and borrowed funds, Tokyo-based Canon said in a statement Thursday. The agreement comes a day after unsuccessful bidder Fujifilm Holdings Corp. questioned Toshiba about the sale.
Toshiba, which makes everything from nuclear power equipment to laptop computers, flash memory chips and home appliances, is seeking to revive profits by narrowing the scope of its business lines. An accounting scandal has left the conglomerate in tatters, facing record losses, job cuts and potential spinoffs.
Canon is buying a business that makes diagnostic imaging systems such as MRI, X-ray and ultrasound equipment. It also puts the company into competition with General Electric Co., Royal Philips NV and Siemens AG for MRI machines that typically cost more than $100,000 each.
Canon is diversifying as smartphones with increasingly advanced cameras eat into its business. It also makes printers, fax machines and projectors while its existing health care business includes radiography and ophthalmic equipment, its website says.
“There is no reason to believe that the selection process wasn’t fair and that Canon is paying an unfairly low price,” said Damian Thong, an analyst at Macquarie Group Ltd. in Tokyo. Canon had ¥654 billion in cash and equivalents as of Dec. 31 with total debt of ¥1.6 billion, according to data compiled by Bloomberg.
On Thursday, Fujifilm disclosed that it had asked Toshiba a day earlier to explain how it decided to enter exclusive negotiations with Canon, and also cast doubt on Toshiba’s plan to complete the deal by the end of the fiscal year this month, citing the length of time usually needed to clear antitrust scrutiny.
The statement called on Toshiba to respond by 3 p.m. on Thursday. Instead, Toshiba announced that it reached an agreement with Canon.
Toshiba is seeking to raise money as it deals with the fallout from a major accounting scandal. The Tokyo-based firm granted Canon exclusive negotiation rights on March 9, passing over Fujifilm.
Another bidding group led by Konica Minolta Inc. was dropped after it offered less than what was sought. Toshiba chief Masashi Muromachi is divesting the medical unit, cutting jobs and considering a reorganization of its computer and TV operations as it forecasts a record loss for the year.
Toshiba’s health care division, which includes medical equipment and other businesses Toshiba doesn’t plan to sell, had sales of ¥409.5 billion in the previous fiscal year ending March 2015 and operating income of ¥23.9 billion, data compiled by Bloomberg says.
But Toshiba’s shares slumped on Thursday on news that it is under investigation by the U.S. over allegations that it hid $1.3 billion in losses at its nuclear power operations. The Justice Department and the Securities and Exchange Commission are looking into whether fraud was committed, according to two people familiar with the matter. The stock declined 8 percent to ¥192 in Tokyo. Canon fell 1.4 percent, while Fujifilm fell less than 1 percent.
Toshiba’ agreement with Canon was announced after the market closed.