Canon Completes $5.6 Billion Acquisition of Toshiba Medical Systems to Expand into Medical Imaging

Noon Update on December 20: Canon has announced the completion of its acquisition of Toshiba Medical Systems, a subsidiary of Toshiba Medical Corporation. The transaction value is approximately JPY 665.5 billion (equivalent to RMB 39.5 billion at the current exchange rate; when the acquisition was announced in March, it was equivalent to approximately RMB 38.7 billion).

The above information was reported by Kyodo News, a major Japanese news agency. Toshiba Medical Systems Corporation, formerly a premier subsidiary of Toshiba, was primarily engaged in the manufacturing and sales of medical devices such as magnetic resonance imaging (MRI) scanners and X-ray examination systems. In March this year, Toshiba, which faced a management crisis following the exposure of accounting fraud, announced the sale of this subsidiary. Fujifilm Holdings Corporation and others submitted bids for the acquisition, with Canon ultimately emerging as the successful bidder.

2016 marked the beginning of Phase V of the Canon Group’s “Global Excellent Company Group Concept.” Canon put forward the basic policy of “achieving a major strategic transformation and embracing new development challenges,” and formulated seven key strategies. The second strategy emphasized diversification by expanding into adjacent areas of existing businesses, with the aim of creating and growing new ventures. Management resources were prioritized for allocation to sectors such as commercial printing, security surveillance cameras, and life sciences, with business scale rapidly expanded through mergers and acquisitions.

Canon recognizes the immense growth potential in the healthcare sector and is leveraging its CMOS sensor and inkjet printing technologies to develop genetic testing devices that significantly reduce processing time. In 2015, Canon U.S.A., Inc. established Canon BioMedical, Inc. with the goal of commercialization, and also launched the “Novallele” kit, which provides gene sequence information for research on cancer and genetic diseases.

Regarding the acquisition of Toshiba Medical Systems, Canon stated that it will fully leverage Toshiba Medical’s technologies, such as diagnostic imaging, to strengthen its healthcare business. The company also aims to explore new related fields and is considering further mergers and acquisitions.

Canon Group achieved a turnover of $31.407 billion in 2015, with office products contributing 55.5% and imaging system products accounting for 33.3%; it realized a net profit of $1.82 billion. In recent years, the Canon Group’s turnover has remained stable, and its net profit has followed the aforementioned trend; however, it has still declined compared to earlier years.

Changes in Canon's Turnover from 2006 to 2015, Source: Canon Annual Report

Canon’s Net Profit Changes from 2006 to 2015, Source: Canon Annual Report

In addition to making significant investments in the healthcare sector, Canon has also participated this year in the development of a micro-rocket by the Japan Aerospace Exploration Agency (JAXA). Leveraging its accumulated expertise and technology in precision instruments, Canon will provide the control system for the rocket’s body.

Source: Sina Tech