With layoffs of 10,000 people and multiple business divestitures, as a corporate empire that has long represented Japan's technological development and economic growth, Toshiba has now fallen to the point of insolvency since the $1.3 billion financial fraud scandal broke out.
On the afternoon of the 17th, Canon finally agreed to acquire Toshiba medical business with medical imaging equipment as the main body for about 5.9 billion US dollars in cash. Unlike other businesses sold by Toshiba, the medical business is not only the only sector in Toshiba's financial report that maintains healthy growth, but also the business that global investors are optimistic about. After the sale of iron in the shabu-shabu, Toshiba can be said to have sold all the pearls in the house, which is enough to see how tough Toshiba is now.
How is the iron sold in the shabu-shabu?
Japanese media has just revealed that China's home appliance giant Midea wants to invest hundreds of millions of dollars to acquire Toshiba white goods business, and negotiations have entered the final stage. Last year, Toshiba sold its Indonesian branch, which manufactures and sells TV sets and washing machines, to China Skyworth for about $25 million. In the same year, Toshiba transferred its image sensor business to its local rival Sony for $166 million. In addition, Toshiba also wants to merge its notebook business with Sony's VAIO and Fujitsu.
As is well known, the home appliance business has become a burden for Japanese electronics giants. Due to the rise of Chinese companies, the profit margins of Japanese home appliance companies have declined and their competitiveness has declined. It has become a general trend to gradually withdraw from the home appliance market. Sharp, Panasonic and Sony are all selling their home appliances business. Therefore, it is not surprising that Toshiba sells the home appliance industry. Image sensors are mainly related to photographic equipment. Recently, market growth has also weakened. In addition, notebook computers have been hit by mobile phones and tablets. It is reasonable to sell these businesses.
However, if these businesses are called squatting and selling iron, the medical business based on imaging equipment (MRI/CT equipment) is definitely the pearl in the Toshiba business. In today's medical imaging equipment market, Toshiba's products still maintain the same strength as the European and American Big Three GPS (GE, Philips and Siemens), and it is the only business in Toshiba that has broken the healthy growth. It is no wonder that Toshiba once thrown out this business, in addition to attracting the bidding of industrial giants such as Canon, Fuji, and Konica, even the US capital crocodile KKR smelled the interest.
The reason why the potential medical business is also sold is because of Toshiba's record loss. According to Toshiba's 2015 financial forecast, its net loss for the year may reach 710 billion yen (about 6.4 billion US dollars). In order to stabilize the stockholders' sentiment, Toshiba launched a restructuring plan, and in order to make up for such a big hole, it is certainly not enough to sell some business in the sunset.
According to Toshiba, if the sale can be completed before the end of the fiscal year, it will turn profitable in FY2015 and earn a profit of 59 billion yen (about 500 million U.S. dollars). Toshiba was also able to abandon its plan to lend $1.8 billion to three Japanese banks.
However, Fuji, who failed to win the bid, after Toshiba granted Canon the exclusive right to negotiate on the medical business of the transaction, questioned why Toshiba chose Canon and believed that the transaction still needs to pass anti-monopoly review, which is impossible at the end of the fiscal year. The delivery was completed at the end of March. Fuji’s words are full of jealousy, but they are also reasonable. However, the reason why Toshiba finally chose Canon is also considered to be that Canon's medical business is very small, and Fuji has a considerable medical business that overlaps with Toshiba. Therefore, Canon's risk is significantly smaller when it comes to antitrust investigations.
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