Toshiba Exits Medical Equipment Business Amid Fraud Allegations

Japanese conglomerate Toshiba Corp., the target of a fraud investigation, said Thursday it has reached a ¥665.5 billion ($6 billion) deal to sell its medical equipment unit to Canon Inc. (CAJ). The company simultaneously revealed an agreement that essentially hands a majority stake in its appliance unit to China's Midea Group Ltd. News of the agreements came as Bloomberg LP reported that the Justice Department and the Securities and Exchange Commission have launched a fraud investigation at Toshiba's Westinghouse nuclear power division. The reported investigation follows Toshiba's admission last year that it had overstated profit for almost seven years. That scandal led to fines for the company and its auditors and a raft of resignations, including that of its president and CEO, Hisao Tanaka. Successor Masashi Muromachi in December attempted to get Toshiba back on track by announcing 10,600 job cuts and a restructuring plan designed to narrow Toshiba's focus to energy and storage operations. At the same time the new CEO warned of a record ¥550 billion loss for the year ending March.