Japan: Regulators probing Canon Toshiba Chided $6.5 billion deal

Japanese regulators warned Canon that the way it acquired Toshiba Corp.’s medical-systems unit potentially violated the law, but said the deal can go ahead.

The rules are ambiguous, regulators said Thursday, but they added that any future transaction such as the one between Canon and Toshiba could be subject to a criminal complaint.

Fujifilm Holdings, the loser in bidding for the unit, expressed displeasure at the decision.

At issue is the structure of the deal, reached in March and valued at ¥665.5 billion ($6.5 billion). Canon paid the purchase price up front—Toshiba, having incurred sizable losses after an accounting scandal, needed cash ahead of the March 31 end of its fiscal year—but didn’t immediately receive shares in the medical unit.

Instead Canon got warrants entitling it to the shares once the deal received regulatory approval. Until then, the shares would be parked in a special-purpose company with just $292 in capital.

Japanese law says that a company planning an acquisition that raises antitrust issues must report its plans to the Fair Trade Commission before an agreement. The commission said Thursday that the Canon-Toshiba arrangement could be viewed as skirting the law by effectively doing the transaction first and telling regulators later.

Full Content: The Wall Street Journal

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