Toshiba share price takes hit as US arm faces accounting investigation on same day as it sells Toshiba Medical System Corporation to Canon for £4.2bn

Francesca Washtell
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Toshiba has sold its medical subsidiary to Canon as part of wider restructuring (Source: Getty)

Japanese electronics maker Toshiba Corp is under investigation by the US over allegations the company hid $1.3bn (£906m) in losses at its nuclear power operations.

The company share price dropped more than eight per cent during afternoon trading in Japan following news of the probe by the Justice Department and the Securities and Exchange Commission, who are investigating whether serious fraud was committed in its Westinghouse nuclear power unit accounts.

A 334-page internal review published on Toshiba's website last December claimed management had been complicit in false profit reporting for seven years. The report, which US authorities are said to be using in their investigation, led to the resignations of chief executive Hisao Tanaka and other top officials.

Today the company also announced the sale of its medical unit Toshiba Medical System Corporation (TMSC) to Canon for ¥665.5bn (£4.2bn), less than a fortnight after the Japanese camera maker was granted exclusive negotiation rights to the subsidiary on 9 March.

Created in 1948 TMSC specialises in the development, manufacture, sale and technical services of medical equipment, including diagnostic machinery, medical sample testing equipment and accompanying IT systems.

Toshiba announced it would sell TMSC when it revealed its Toshiba Rebuilding Initiative on 21 December last year.

The plans included cutting 6,800 jobs from its lifestyle business division, which deals with PC, visual products and home appliances, by March this year. In addition, the company will shift to focusing on cash flow rather than profit for its mid-term business plans.

Chief executive Masashi Muromachi is due to unveil a new business strategy on Friday.

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