Fujifilm Holdings (TSE:4901), which lost out last week to Canon (NYSE:CAJ) in the race to be picked as preferred bidder for conglomerate Toshiba‘s (TYO:6502) medical device business, questioned Toshiba today on the timing of the deal for Toshiba Medical Systems.
In a letter to embattled Toshiba, Fujifilm cited media reports saying profits from the sale would contribute to Toshiba’s finances in the fiscal year ending this month, questioning whether the deal could close in time. Fujifilm said anti-monopoly regulatory approvals normally take at least a month.
Toshiba last week granted Canon exclusive negotiating rights to buy Toshiba Medical after a hotly contested auction. One source with knowledge of the talks put Canon’s offer at more than $6 billion, which would help bolster Toshiba’s capital in the wake of last year’s $1.3 billion accounting scandal.
The move is a rare challenge by a failed bidder in Japan. Fujifilm demanded a reply to the letter by 6:00 a.m. GMT tomorrow; Toshiba declined to comment on the letter, including whether it will respond.
“The United States, Europe, China and others have M&A regulations similar to Japan’s anti-monopoly laws,” Fujifilm worte. “We would like to know Toshiba’s understanding on this question, and whether it has arranged special measures for this.”
The Nikkei business daily said last week that Canon won prime position to take the unit not only because its bid topped $6.2 billion (¥700 billion), but also because there is little overlap between the firms’ medical equipment businesses, raising few anti-trust concerns.
Earlier in March the Wall Street Journal reported that Fujifilm was “eager to buy a 100% stake and had an edge,” citing a source who was familiar with the matter.
In February Toshiba announced plans to sell its entire medical equipment unit rather than just a controlling stake. A bidding war soon developed among a slew of private equity players and rival corporations. Toshiba has also said that it will either shut down or transfer all of its other healthcare businesses by the end of March.
A deal would provide much-needed liquidity for Toshiba, which is facing mounting restructuring costs after the accounting scandal. The rising costs prompted Toshiba’s management to pursue the sale of the entire medical device business initially for as much as $5.78 billion (¥650 billion), much higher than the initial estimate of $3.55 billion to $4.44 billion (¥400 billion to ¥500 billion).
Toshiba Medical Systems put up sales of $3.60 billion (¥405.6 billion) during fiscal 2015, which ended in March of that year.
Material from Reuters was used in this report.