Advertisements

Olympus and Sony agree financial deal

Sony acquires 10% of Olympus in $640 million cash injection

It has been confirmed today that Olympus has finally accepted a proposal by Sony to acquire a little over 10% of the company's equity, providing Olympus with a much-needed injection of cash and forming a strategic partnership between the two companies. Sony will have one representative on the Olympus board.

The move comes after almost one year since a financial scandal rocked Olympus when it was revealed by the then president and CEO of the company, Michael Woodford, that there was an internal cover-up at Olympus to hide investment losses amounting to nearly $2 billion since the 1990s.

Sony's motivation to invest in Olympus us driven primarily by Olympus' success in the medical imaging market where the company has a dominant 70% share in the endoscope market sector. Sony has ambitions in medical imaging but needs Olympus technology to make a go if it. In return, Sony reckons that if Olympus is to build on its endoscope market success it needs another technology partner like Sony. Reports indicate that Olympus regarded the Sony deal as the one that would preserve its independence the most after turning away other suitors including Fujifilm and Panasonic.

So where does this leave the camera business? In recent years Olympus cameras have been a source of financial losses. Optimists suggest that with the success of compact system cameras, in which Olympus is one of the market leaders, the camera division will soon return to profitability. It's with interest that Olympus is now using Sony imaging sensors in its Micro Four Thirds camera range. I would expect the two company's respective camera divisions to remain separate and to compete via their own unique identities. But in the back rooms there could be closer cooperation.

Hopefully, the deal will mark the beginning of a turn around for Olympus, which has endured a most ignominious year from a corporate point of view.