Fujifilm, Canon lead the running in $6B race for Toshiba Medical

Fujifilm Holdings (TSE:4901) and Canon (NYSE:CAJ) are at the head of the crowd looking to pick up Toshiba‘s (TYO:6502) medical device business, according to The Wall Street Journal, at a price possibly reaching $6 billion.

The 2nd round of bidding for the division is slated to close Friday, with Toshiba likely selecting a single bidder to enter exclusive talks with by as early as next week, the paper reported.

Fujifilm is “eager to buy a 100% stake and had an edge,” according to The Wall Street Journal, who said the information came from someone familiar with the matter.

Toshiba could bring in as much as $6 billion through the sale, according to the paper.

Last month, Toshiba announced 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 has driven 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 last 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 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 and Canon are still 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.

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

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