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Toshiba to sell non-imaging health care business in addition to Medical Systems division

by Thomas Dworetzky, Contributing Reporter | February 08, 2016
Business Affairs Medical Devices
As the fiscal walls continue to close in on Toshiba Corp., it looks like the accounting-scandal-plagued OEM is going to unload most, if not all, of its health care business that isn't part of the imaging division, Toshiba Medical Systems.

Toshiba also faces greater losses than earlier forecast.

In addition, as previously reported by HCB News, the company is seeking outside investors for the health care units it plans to keep, and suitors are circling.

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"Key business units in the Healthcare Company, most notably the heavy-ion radiotherapy system business and the genotyping/genome sequencing service, will be transferred to other parts of Toshiba Group," the company affirmed in a statement, adding that, "the future of other businesses, such as wristband-type biosensors, and their transfer within or outside Toshiba Group, is still under consideration. Toshiba will make final decisions on the business direction by the end of this March."

This decision comes after previous indications that massive restructuring would be needed in the wake of ballooning costs following the accounting scandal that came to light in 2015.

"I feel deeply responsible," Masashi Muromachi, president of Toshiba, said at an early February press conference announcing the plans, according to Kyodo News.

As part of its broad restructuring it stated that it will introduce an early retirement incentive program for employees working in Japan. Its latest announcement will add at least 240 additional job cuts to some 10,000 already indicated.

Overall, the scandal has lead to massive losses. Its annual loss is now estimated to hit a record 710 billion yen ($6 billion), according to Bloomberg. That new forecast from Toshiba is 29 percent bigger than its earlier 550 billion yen ( $4.86 billion) shortfall and the 505.5 billion yen loss average of 10 analysts’ estimates collected by the news organization.

Toshiba stock has hit a 35-year low, to a level not seen since Dec. 1979, thanks to the scandal that showed that management was "complicit" in "padding profits" for nearly seven years, according to Bloomberg.

“To get to a healthy balance sheet from this point will take many years of work, so we are just coming to the end of the beginning of a very long race,” Macquarie Group Damian Thong told the news organization. “They’ve got to complete the medical sale and find a way to permanently resolve the overhang in the appliances and consumer electronics businesses.”

HCB News reported earlier that the firm is likely to invite outside investment in its medical systems unit.

Buyout firms are also circling. Konica Minolta and Permira are reportedly bidding, as are KKR, teaming up with Matsui, and Carlyle Group. Sony, Hitachi, Canon, GE Healthcare and the Samsung group have also been referenced as possible bidders — even the Development Bank of Japan may get involved, teaming up with a successful bidder.

If it sells 80 percent of its medical systems unit, Toshiba expects to gain $3 billion to $4 billion, according to various news sources.

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