Olympus mulls tie-up with Sony, Panasonic

TOKYO, JAPAN: Japan's Olympus Corp is scouting the global electronics industry for a friendly investor to help it recover from an accounting scandal and has put Sony and Panasonic on its short list, a newspaper said on Thursday.

Olympus, a maker of cameras and medical equipment, has been wounded by a $1.7 billion accounting fraud that burst into the open in October, shredding its share price, leaving its management in disgrace and its balance sheet damaged.

The Asahi Shimbun newspaper listed the two electronics firms as among a short-list of five that Olympus would foresee injecting fresh capital in return for a minority stake and a seat at the table of the global healthcare industry.

Olympus dominates the global market for gastro-intestinal endoscopes, regarded as the kind of high-tech, profitable and stable business that some major electronics firms would covet.

Asahi, quoting unidentified sources, said Olympus had also put South Korea's Samsung Electronics, Japanese medical-equipment firm Terumo Corp and rival camera and endoscope company Fujifilm Holdings on its short-list.

But Samsung has already ruled itself out, a company source said on Thursday.

"We are not interested in any Japanese camera-makers except Canon and Nikon. But those two are not on sale," the source at Samsung told Reuters, on condition of anonymity due to the sensitivity of the issue.

Olympus had approached Samsung but the Korean giant saw little merit in a combination in terms of technology and branding, the source added.

The Asahi said Olympus planned to decide on a tie-up as soon as February and was looking to raise up to about 100 billion yen ($1.3 billion) in new equity, though it was unclear if either Olympus or its major owners were in talks with any of the five.

Olympus, responding to the Asahi report, said only that it was considering various reform options and nothing was decided.

Sony, Panasonic and Fujifilm have already been examining the scope and timing of a possible equity stake in Olympus, sources familiar with the matter have told Reuters, adding that each was keen on the lucrative medical equipment sector.

The Asahi report sent shares in Olympus climbing as much as 6 percent, recovering further from the depths of a crisis that at one point in November had torched 80 percent of its value.

After Thursday's rise, the once-venerable stock is down about 40 percent from the day before it fired its British chief executive, Michael Woodford, who then went public with his concerns about Olympus' dubious book-keeping.

Rumour Mill

The news follows persistent speculation that electronics firms are interested in Olympus's endoscope unit, a robust business that appears to have weathered one of Japan's worst corporate scandals without a major customer boycott.

Sony, Fujifilm and Terumo declined to comment on Thursday.

A Panasonic official said: "We are not considering a capital tie-up at this point."

Panasonic's comment has failed to extinguish talk in Japan that it might yet take a stake in Olympus, once the disgraced firm has finally put the accounting scandal behind it.

Sony Chairman and President Howard Stringer, speaking at the Consumer Electronics Show in Las Vegas this week, declined to comment on speculation that his firm was also interested in Olympus, saying it was inappropriate to comment.

Panasonic President Fumio Ohtsubo, speaking at the same event, had said: "The situation is unclear, so we aren't doing anything at this time."

Olympus turned from a venerable blue chip into an investor nightmare in October, when it suddenly sacked its British chief executive, sparking a scandal.

Later, after initial denials, Olympus was found by a company-appointed team of outside investigators to have hidden investment losses from its investors for 13 years.

Having recently restated its accounts, the firm is highly geared and in need of fresh capital. It remains under investigation by police, prosecutors and regulators.

It is also in the extraordinary position of being run by a board of directors, more of half of whom are being sued by Olympus for mismanagement. The current board, however, plans to resign and usher in a new board by March or April.