Struggling Toshiba Corp plans to sell its entire medical equipment unit rather than just a controlling stake, people familiar with matter said, adding that aggressive bidding could value the business at much more than initial estimates of $3.5 billion.
The deal will provide much needed liquidity to Toshiba, which is grappling with the fallout from an accounting scandal, warning this month that its annual loss will be larger than previously estimated. Rising restructuring costs have prompted management to pursue an entire sale of Toshiba Medical Systems Corp, the people said.
People familiar with sale process said a price tag between 400 billion yen to 500 billion yen ($3.5 billion to $4.4 billion) was a reasonable value for the unit. But one person said the deal value could go as high as 650 billion yen amid strong demand for medical businesses with high growth prospects.
Global buyout firm KKR & Co (KKR.N) as well as Canon Inc (7751.T), Fujifilm Holdings Corp (4901.T) and Konica Minolta Inc (4902.T), Japanese imaging firms with medical device units, have been shortlisted for the second round of bidding, they said. The deadline for the bids is Friday.
KKR, which controls medical equipment maker Panasonic Healthcare Co, has partnered with trading house Mitsui & Co (8031.T), while Konica Minolta has partnered with Permira, the people added.
The people asked not to be identified because they are not authorized to speak to the media. Toshiba and representatives of all short-listed parties declined to comment on the deal.
Toshiba Medical makes diagnostic equipment such as X-ray and magnetic resonance imaging (MRI) systems and is the world’s second-biggest manufacturer of CT scan machines. It had annual revenues of 405.6 billion yen in the financial year ended March 2015.
Toshiba has said it is planning to sell either a controlling holding or the entire stake but so far has not specified which.
Buyout funds that did not make the cut to the second round of bidding include Carlyle Group (CG.O) and Bain Capital, one of the people said.
In the wake of a book-keeping scandal in which it overstated profits from around 2009, Toshiba’s stock has lost some 65 percent of its value and CEO Masashi Muromachi has pledged accelerated restructuring.
The company, which has seen its credit rating cut to junk by Moody’s Investors Service, has announced more than 10,000 job cuts. It also plans to overhaul its chip business and to sell its loss-making laptops and home appliances businesses.
It said this month it expects to have made a net loss of 710 billion yen for the year ending in March compared with a previous estimate of a 550 billion yen loss, citing the need to fully reflect downside risks to its business.
($1 = 113.0000 yen)