Japan’s regulator approves Canon deal to buy Toshiba unit, warns on method

Japan’s anti-monopoly regulator has approved Thursday  Canon Inc’s (7751.T) acquisition of Toshiba Corp’s (6502.T) medical equipment unit, but issued a warning over the way they carried out the deal, which antitrust experts have called questionable.

Toshiba, hurt by an accounting scandal and in a hurry to raise cash before closing its books for the business year that ended in March, structured the 665.5 billion yen ($6.5 billion) sale in an unorthodox way so that it could book proceeds before securing approval from regulators.

Some antitrust and accounting experts at the time said the method, involving the issuance of warrants to allow Toshiba to receive cash from Canon before regulatory approval, was problematic though not illegal.

The Fair Trade Commission (FTC) said on Thursday the method may be in violation of antitrust laws. However it did not issue any fine and approved the deal anyway.

“Canon thought the deal would be approved without problem if they used this method. They didn’t consult with us in advance,” FTC official Takeshi Shinagawa told reporters. “If others use this method in the future they could get the red light.”

Earlier, a person with direct knowledge of the matter said the commission had been investigating Canon for possible breach of disclosure rules related to the deal. The person was not authorized to speak to media and so declined to be identified.

Canon declined to comment. A Toshiba spokesman said the company had consulted with experts on the deal and that it saw no problem in the sale process from a legal perspective.

Source: Reuters