Olympus Corp. has officially agreed with Sony Corp. for a capital tie-up that will make the electronics giant the largest shareholder in the struggling camera and medical equipment maker, sources said Sept. 21.
Sony's injection of about 50 billion yen ($625 million) will give it a more than 10 percent stake in Olympus.
Sony will also send a board member to the company.
The two firms also decided to set up a joint company this year to develop and manufacture endoscopes and to conclude a business tie-up in the camera business. They will consider cost-cutting measures, including a system to use common parts, the sources said.
The capital and business tie-ups will be announced on Sept. 28, they added.
According to the sources, Olympus’ capital adequacy ratio dropped to as low as 2.2 percent at the end of June this year. With Sony’s capital injection, however, the ratio will exceed 10 percent, eliminating concerns about the management of Olympus, which has been struggling since its accounting scandal was revealed in 2011.
Despite the scandal, Olympus’ endoscope business has remained strong, and the company still controls about 70 percent of the global endoscope market.
Through the tie-up with Olympus, Sony plans to nurture its medical field into a main profit-earner that can offset its money-losing television production business.
Because of Olympus' dominance in the endoscope business, some company officials strongly opposed Sony’s demands to appoint a board member and establish the joint endoscope company.
Olympus temporarily considered a capital injection from an investment fund to reduce the amount from Sony.
However, Olympus eventually accepted Sony’s demands because its overseas assets decreased in value due to the appreciation of the yen. As a result, Olympus' debts were likely to exceed its assets.
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