January 23, 2017
Mainichi reported that Canon “will consider investing” in Toshiba’s semiconductor business to help the latter “secure funds to make up for massive losses incurred in its US nuclear business”. Canon’s Chairman Fujio Mitarai commented that the chip business “has high value”, and that “we will positively consider” investing in the flash memory business, which Toshiba “plans to spin off” by selling a “20 to 30 percent stake via bidding”.
He also added that the semiconductor business “must be protected” in that “domestic companies should invest in Toshiba’s mainstay business”, with the investment “expected to attract hundreds of billions of yen, or billions of dollars, as a whole” according to Mainichi. Six companies including Canon are “likely to join the bidding”, such as Bain Capital and Permira in addition to Canon, which the news site calls “Toshiba’s long-time business partner”.
The OEM is set to “make a final decision on the investment after receiving a formal offer from Toshiba”, which is planning “to retain a majority stake”, and which is selling the unit as “it is anticipating an asset impairment charge” of up to ¥700 billion ($6.1 billion/€5.7 billion) “related to its US nuclear business”.
In March last year, Canon reported its agreement to make TMSC a subsidiary, having “concluded a share transfer agreement”, though the acquisition was dependent on “the clearance of necessary competition regulatory authorities”. Earlier that month, it was reported Canon had been granted “exclusive negotiating rights” for TMSC, after an earlier reveal that Toshiba was to sell the unit, with interested parties including Fujifilm and Konica Minolta.
The sale of the unit was aimed at “shoring up Toshiba’s capital” after it was found to have “inflated profits […] with bosses’ knowledge” by around ¥780 million ($1.2 billion/€1.1 billion) in July 2015. This led to former CEO Hisao Tanaka’s resignation after admitting he was aware of the scandal, facing an action for compensation of ¥300 million ($2.4 million/€2.2 million), along with two former CFOs and two other ex-CEOs. The profit scandal cost the OEM around ¥90 billion ($738 million/€680 million) in the first half of the financial year, and lies behind the restructuring plans.
However, as The Recycler reported in April last year, Toshiba was paid before the deal was closed, with Reuters calling the move a “manoeuvre skirting antitrust rules”. In July last year, the FTC had approved the acquisition, but “issued a warning over the way [Canon and Toshiba] carried out the deal”, before December saw the acquisition confirmed.
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