Scandal hit Toshiba sells medical devices unit to canon for $5.9 bn

TOKYO: Japan’s Toshiba has sold its medical devices unit to camera and office equipment maker Canon for almost $6 billion, it said Thursday, as it sheds businesses to recover from a major accounting scandal.

The deal came as Toshiba’s share price plunged nearly eight percent after a report it was under investigation by US authorities over allegations it hid losses in its nuclear business.

News of the Canon deal comes as Toshiba expects a whopping loss of about $6.0 billion for the year to March due to sagging global demand and a profit-padding scandal, in which high-handed bosses for years systematically pushed their subordinates to cover-up weak financial figures.

In the wake of the scandal, Toshiba, a vast conglomerate that makes everything from rice cookers to nuclear plants has ushered in thousands of job cuts and plans to sell various business units in a bid to revive its fortunes.

Under the deal Toshiba sold all its shares in Toshiba Medical Systems, a major producer of medical imaging tools such as MRI and CT scans, to Canon for 665.5 billion yen ($5.9 billion).

In December, Japan’s Securities and Exchange Surveillance Commission said Toshiba should be slapped with a record 7.37 billion yen fine over the profit-padding scheme that hammered the reputation of one of Japan’s best-known firms.

Many Japanese high-tech companies are rushing to enter the medical field, as a graying population boosts demand for healthcare services and tools.

Sony launched a medical joint venture with endoscope maker Olympus, which also went through a massive loss-hiding scandal and required a strong partner to rebuild itself.

Shares in Toshiba plunged 7.96 percent to 191.8 yen after a report said it is being probed by US authorities over allegations it hid $1.3 billion in losses at its nuclear power operations. It had been up almost five percent before the story broke.

Bloomberg News, quoting unnamed sources, reported that the US Justice Department and the Securities and Exchange Commission are examining whether any fraud occurred.