Scandal-plagued Toshiba sells medical unit to Canon

Staff Writer
Columbus CEO

TOKYO (AP) — Scandal plagued Japanese electronics maker Toshiba Corp. sold its medical unit to Japanese camera maker Canon Inc. for 665.5 billion yen ($5.9 billion) Thursday, both sides said.

Separately, Toshiba said it had reached an agreement with Chinese home appliance manufacturer Midea Group about selling its refrigerator and other so-called "white goods" business, targeting the end of March. Pricing and stakes have not yet been decided, according to company spokeswoman Midori Hara.

Canon said in a statement that the acquisition of Toshiba Medical Systems Corp. as a 100 percent-owned subsidiary would aid its ambitions to expand its medical equipment business. Toshiba Medical's strengths are in X-ray and ultrasound systems.

Tokyo-based Toshiba has been struggling with a major accounting scandal over disclosures that company officials doctored accounting books for years after setting unrealistic earnings targets.

The company also is facing major problems in its nuclear business after the March 2011 accident at a plant in Fukushima, northeastern Japan, which sent three reactors into meltdowns.

Because of a public outcry amid doubts about the technology's safety, all but two of the reactors in Japan remain shut down. Toshiba's electronics devices operations have also taken a hit because of intensifying competition and dropping sales.

For the fiscal year through March, the company is forecasting a 710 billion yen ($6.3 billion) loss, even bigger than its initial projection. The company will be racking up its second year of red ink.

Toshiba's chief executive resigned last year to take responsibility for the scandal. But reform efforts for better corporate governance have turned up even more accounting wrongdoing at Toshiba.

Japanese corporate culture, with its emphasis on consensus and propriety, has often been blamed for systematic cover-ups at Japan's most prestigious companies, including Olympus Corp. and Mitsubishi Motors Corp.

Unlike some Western accounting scandals, such scandals in Japan did not result in any enrichment of individual employees. Instead, workers collaborated to "save face" for the company.

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