Toshiba Corp., a manufacturer of imaging equipment, is selling its medical unit to Canon for about $6 billion.
The move comes as Toshiba looks to reorganize and refocus its business in an effort to improve its ailing finances. The Tokyo-based company, which has sold everything from televisions to nuclear power plant components, reported the yen equivalent of roughly $4.3 billion in losses during the first nine months of fiscal 2015, which began last April. Toshiba lost roughly $4.7 billion last quarter alone, and is also selling off its consumer electronics business.
Despite the company's poor overall finances, Toshiba Medical Systems Corp. brought in roughly $2.8 billion in sales and about $142 million in profit in 2014.
The company's medical equipment products include CT, MRI and ultrasound scanners, as well as a number of different X-ray machines. Canon primarily sells the digital detectors used in X-ray machines, but also sells complete X-ray machines and retinal cameras. Both companies also offer related software.
Toshiba has completed its divestment of the medical unit, although Canon still needs to obtain regulatory approval to absorb the company as a subsidiary. Toshiba Medical Systems Corp. will be held by an independent third party company in the interim.
Toshiba expects $5.3 billion in profit from the sale if it is accretive to fiscal 2015. The company said it will soon update its 2015 guidance to reflect the transaction.
Nadim Daher and John Davies of consulting firm Frost & Sullivan said in a statement that the high price tag on the deal reflects the rarity of “the opportunity to gain overnight” a position among the biggest manufacturers in the $26 billion global medical-imaging market. Daher and Davies said the deal also presents an opportunity for Canon to gain a leading position in ultrasound, and follows the trend of imaging providers combining their ultrasound and radiology businesses.