Canon to buy Toshiba's stake in display unit

Even without the stake in the display venture, Toshiba said it will buy some displays from Canon and sell SED TVs under the Toshiba brand, while Canon will separately market its own TVs.

Some analysts said the change in plan may be positive for Canon shareholders.

"Investors in Canon have always wanted the company to use its ample cash flow in some form or another, and they are going to like the move as effective investment in a new business," said Keishin Mo, an analyst at Shinko Securities.

The companies declined to provide financial details of the transaction, which is scheduled for completion on January 29.

"The decision was reached following discussions between Canon and Toshiba based on the assumption of prolonged litigation pending against Canon in the United States with respect to SED," the companies said in a statement.

Last month, the companies scrapped a plan to display a 55-inch SED TV at the Consumer Electronics Show, one of the biggest industry events, in Las Vegas this week.

Shares of Canon closed up 1.2 percent at 6,540 yen in Tokyo, in line with the gain in the overall market. Toshiba rose 0.9 percent to 819 yen.

(Additional reporting by Sachi Izumi and Aiko Hayashi)