Bloomberg News

Olympus Gets Alliance Offers From Sony, Fujifilm, Terumo

April 03, 2012

Hiroyuki Sasa, president-designate of Olympus Corp. Photographer: Tomohiro Ohsumi/Bloomberg

Hiroyuki Sasa, president-designate of Olympus Corp. Photographer: Tomohiro Ohsumi/Bloomberg

Olympus Corp. (7733), the Japanese camera maker that admitted to a 13-year cover-up of investment losses, said it received capital alliance offers from Sony Corp. (6758), Fujifilm Holdings Corp. (4901) and Terumo Corp. (4543)

Olympus got offers from “more than three” potential partners and may decide as early as next month whether to form a tie-up, President-designate Hiroyuki Sasa said in an interview in Tokyo today. He didn’t name the others. The company plans to release its business plan as early as May, he said at Olympus headquarters.

Sasa, who’s been nominated to replace Shuichi Takayama, is trying to restore confidence from investors after a $1.7 billion accounting fraud was revealed. Olympus, the world’s biggest maker of endoscopes, said in February it may seek an alliance to bolster capital eroded by restating securities reports.

“There’s nothing wrong with the company’s main business,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “Still, it needs to restore investor confidence before it can raise funds from the market. The fastest and easiest way to boost capital is forming an alliance.”

Olympus’s net assets fell to 43.8 billion yen ($536 million) as of Dec. 31 from 151 billion yen as of June 30, according to its financial statements.

The company’s ratio of capital to total assets dropped to 4.4 percent, the company said in February. The ratio was 13.5 percent as of June 30, Olympus said Aug. 5. The average of 15 global peers in the precision engineering sector is 46 percent, according to data compiled by Bloomberg.

Loss Forecast

“We can’t leave the ratio as is,” Sasa, 56, said. “My stance on forming partnerships is still neutral as we will first work on our business plans and then decide if we need partners.”

Olympus shares have plunged about 47 percent since the company fired Michael Woodford as president on Oct. 14 after he raised questions about its accounting. The stock rose 1 yen to 1,304 yen in Tokyo trading today.

The company controls 75 percent of the global market for endoscopes, instruments that doctors use to look inside the body’s cavities to help detect disease.

Olympus forecast its first annual loss in three years for the fiscal year ended March 31 after flooding in Thailand damaged its equipment. The net loss may total 32 billion yen, it said in February.

The company expects to make its digital-camera business profitable this fiscal year after expecting a loss for the second straight year, Sasa said. It has no plan to withdraw from digital cameras, he said.

New Board

Olympus has proposed an 11-member board to replace Takayama and other executives at an extraordinary shareholders meeting on April 20. Sasa, head of marketing at the medical systems unit that is now the company’s biggest earner, has been nominated as president.

Shareholders will vote on the nominees, who include Yasuyuki Kimoto, a former executive at main creditor Sumitomo Mitsui Financial Group Inc. (8316), as chairman.

Overseas investors including Southeastern Asset Management Inc. and Harris Associates LP have criticized the role of current executives in proposing a new board, saying a clean sweep of management is needed to restore confidence. An outside panel in December reported a culture of “yes men” at Olympus that failed to stop senior executives funneling money through offshore vehicles to hide losses.

Olympus this month named Akihiro Nambu, who was head of investor relations, to run the financial division after Southeastern Asset and other shareholders called for him to resign over the accounting fraud.

Sasa declined to comment on Nambu’s appointment.

Founded in 1919 as a microscope and thermometer business, Olympus produced its first camera in 1936 and a predecessor to the modern-day endoscope in 1950, according to its website.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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