Buying Toshiba Medical: the pivot into medicine (2016)

The necessity of the pivot, and the fineness of its means

The core of this acquisition is that, to the question of how to get beyond a stagnating core business, Canon gave the answer of a huge outside acquisition. With cameras, its founding trade, being eaten away by smartphones and the growth of office machines slowing, there was a firm logic to the choice of stepping in earnest into medical equipment, where its optical and precision-machinery technology could live. The price of $6.1B (¥666bn) was among the largest ever, but without the opportunity of Toshiba’s crisis it would have been hard to acquire, in one piece, a fine diagnostic-imaging business. As a direction for the business pivot, this decision made sense.

What remains is the rights and wrongs of the means. Prior notification under the Antimonopoly Act is a mechanism by which the authorities confirm in advance the effect on competition, and the reshuffling of shares that moved the money before that step ran ahead of the order the system had assumed. That the Japan Fair Trade Commission stopped at a “caution” rather than judging it a violation, that Fujifilm was indignant that it was unfair, and that the U.S. Department of Justice later imposed a settlement, together tell that this method carried a fineness of line that could be called neither white nor black. The necessity of the business pivot and the rightness of the means used to hurry it are asked separately. How far may a buyer accommodate the accounting convenience of a seller — this acquisition, which gained Canon a new pillar in medicine, still carries a tension between outcome and procedure.