Japan's Fair Trade Commission has approved Canon's (NYSE:CAJ) acquisition of Toshiba's (OTCPK:TOSYY) medical equipment unit, but said it would prohibit further use of the deal's unusual structure.
Hurt by an accounting scandal and in a hurry to raise cash before closing its books in March, Toshiba structured the ¥665.5B ($6.5B) sale in an unorthodox way so it could book proceeds before securing approval from regulators.
Toshiba, which is selling the unit to help fund restructuring after its accounting scandal, says the deal will yield a ~¥590B profit in the current fiscal year ending this month if it closes in time.
However, Toshiba shares are -8% in Tokyo on reports that the company is under investigation by the U.S. Justice Department and SEC over allegations that it hid $1.3B in losses at its nuclear power operations.
Toshiba (OTCPK:TOSYY) will reveal its business strategy for next fiscal year on Friday in an announcement expected to include plans to sell its medical equipment unit to Canon (NYSE:CAJ) and boost its finances following a $1.3B accounting scandal.
The Japanese industrial conglomerate is also in late-stage talks to sell its white goods business to the Midea Group, in a deal that's expected to fetch tens of billions of yen.
Canon (NYSE:CAJ) is looking to spend another $3B to acquire a company in a growth sector after announcing it would buy security camera maker Axis Communications in February.
"We’re looking for a company with technology that we don’t have and that complements our technological capabilities," CEO Fujio Mitarai said in an interview. "The field of chemistry related to human life and medical care looks like a promising industry."
Mitarai also added that he's seeking opportunities both at home and abroad.
Growing its surveillance products business amid weak sales of its digital cameras, Japan's Canon (NYSE:CAJ) said it plans to buy security camera maker Axis Communications (OTC:AXSAF) for about 23.6B Swedish crowns ($2.8B).
The Swedish company said that its board of directors has accepted Canon’s bid, which represents a 49.8% premium to the company’s closing share price on Monday.