Report: Toshiba to sell entire medical equipment biz

Toshiba (TYO:6502) reportedly plans to sell its entire medical equipment unit, Toshiba Medical Systems, rather than just a controlling stake, setting the stage for an aggressive bidding war that could drive the purchase price much higher than the $3.5 billion initial estimate.

A bidding war for a majority share in Toshiba Medical business was already heating up earlier this month among a slew of private equity players and rival corporations, as the Japanese industrial conglomerate sought outside investors. Also this month, Toshiba said it would either shut down or transfer all of its other healthcare businesses by the end of March.

Whatever its size, a deal would provide much-needed liquidity for Toshiba, which is facing mounting restructuring costs after a $1.3 billion accounting scandal. Citing “people familiar with the matter,” Reuters reported today that the rising costs prompted Toshiba’s management to pursue the sale of the entire business for as much as $5.75 billion (¥650 billion), much higher than the initial estimate of $3.5 billion to $4.4 billion (¥400 billion to ¥500 billion).

Private equity shop KKR and Toshiba rivals Fujifilm Holdings (TSE:4901) and Canon (NYSE:CAJ) are in the running, but Bain Capital and Carlyle group have dropped out of the bidding, the sources told Reuters. Other offers include joint bids by Konica Minolta (TYO:4902) and PE shop Permira. The deadline for bids is March 4.

Toshiba Medical Systems put up sales of $3.59 billion (¥405.6 billion) during fiscal 2015, which ended in March of that year.

($1 = ¥113.0)

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