Sony to bail Olympus out
Sony has announced that it has entered into a deal with Olympus, injecting the struggling company with USD 645 million and saving it, after a financial scandal last year.
Sony has announced via a press release that it has entered into a 645 million dollar deal with Olympus in order to save the company, which under the past few months has been experiencing trouble, largely due to a scandal involving fraud amongst Olympus' executives. In exchange for Sony's investment, Olympus will be giving Sony a seat on it's board of directors as well as a 51% stake in Olympus' medical imaging business. Finally, the two companies will trade camera technologies, ensuring that both companies can draw on the strengths of the other, and thus produce superior products.
The economic trouble Olympus has been experiencing over the past few months traces it's roots to a scandal, in which top executives committed fraud by tweaking the company's value in it's financial reports and hiding it's losses during 2007 and 2008. Olympus' former chairman, VP and auditor all pleaded guilty to the charges, which were revealed by now former CEO Michael Woodford. Later, it was revealed that the company has been altering it's financial statements as far back as the 1990's and that Olympus' actual value, as of 2011, may be as much as 1 billion USD less than reported. In addition to the scandal, Olympus' camera sales have seen poor performance, and as a result, partnership with another company was the only way for Olympus to survive.
The medical imaging division of Olympus, which Sony has acquired a majority stake in, is however very profitable. Olympus manufactures several devices for medical applications, including endoscope utilizing 4k resolution and 3D imaging. The very first flexible endoscope was manufactured and co-developed by the Olympus Corporation, and since then, the company has held a 70% claim to the market share, at an estimated 2.5 billion USD
As a consumer, the best news regarding the deal is arguably Olympus and Sony's camera businesses: The previously mentioned camera technology exchange between the two companies will see Olympus' high quality mirror cells and camera lenses traded to Sony. In exchange, Sony will trade it's technology on imaging sensors; technology which Sony is particularly strong in.