Bloomberg News

Olympus Investors Lose $3 Billion After Board Fires Woodford

October 17, 2011

(Updates with investor call in 10th paragraph.)

Oct. 18 (Bloomberg) -- Olympus Corp. shareholders including Nippon Life Insurance Co. lost more than $3 billion in value of their holdings over the last two trading sessions after the board fired President Michael C. Woodford.

The maker of cameras and medical equipment yesterday plunged 24 percent, the most since at least September 1974, to 1,555 yen at the close of trading in Tokyo. The stock fell 18 percent on Oct. 14 after the ouster of Woodford.

Goldman Sachs Group Inc., Deutsche Bank AG and Nomura Securities Co. slashed their stock ratings amid concerns about the company’s corporate governance and costs. The Tokyo-based Olympus may face regulatory and legal scrutiny because of payments made to advisers in a 2008 transaction, according to a PricewaterhouseCoopers LLC report commissioned by the Briton.

“There seems to have been funny business going on,” said Edwin Merner, president of Atlantis Investment Co. in Tokyo. “Maybe Olympus can be turned around by a new management, we will have to wait and see.”

Olympus was valued at 422 billion yen ($5.5 billion) as of yesterday, down from the 673 billion yen at the close of trading on Oct. 13, the day before Woodford was fired, according to data compiled by Bloomberg.

Nippon Life, Olympus’s largest shareholder, lost about 21 billion yen in the value of its holdings, based on Bloomberg’s calculation of the 22 million shares held by the company. The insurer owned 8.3 percent of Olympus, according to data compiled by Bloomberg.

Olympus declined to comment on statements from Woodford or the PwC report, Seisho Tanaka, a Tokyo-based spokesman said.

Goldman Puzzled

Akira Tsuzuki, a spokesman for Osaka, Japan-based Nippon Life, Japan’s biggest life insurer, declined to comment.

Potential offenses include false accounting, financial assistance and breaches of duties by the board, according to the Oct. 11 report that Woodford gave to Bloomberg News.

Olympus is considering measures including legal action against Woodford for leaking internal information to media, Executive Vice President Hisashi Mori told analysts and investors on a conference call yesterday, Takumi Kakazu, a Tokyo-based analyst at Morgan Stanley, wrote in a research note.

Chairman Tsuyoshi Kikukawa said at an Oct. 14 press conference that the board fired Woodford, a 30-year veteran of the Japanese company, because he “wouldn’t listen” to warnings from Kikukawa. Woodford, who is now back in the U.K., said he was fired after he challenged the transactions.

“We are still puzzled by this decision by the board,” Goldman Sachs analysts Toshiya Hari and Kenya Moriuchi wrote in a report dated Oct. 14. “We hope to get a genuine response from the management team.”

--With assistance from Komaki Ito, Naoko Fujimura and Mariko Yasu in Tokyo. Editors: Anand Krishnamoorthy, Kenneth Wong.

To contact the reporter on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net

To contact the editors responsible for this story: Bret Okeson at bokeson@bloomberg.net; Brian Fowler at Bfowler@bloomberg.net


Hollywood Goes YouTube
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus