Sony will pay 50 billion yen ($643.5m) to become the biggest shareholder in Olympus, and establish a company with the cash-strapped Japanese camera and endoscope maker to develop medical equipment.
In a widely flagged deal, Sony said that it will hold an 11.46 per cent stake after buying new shares issued by Olympus. The two companies will also look for ways to co-operate in digital cameras.
“We are aggressively pursuing the growth of our medical business, with the aim of developing it into a key pillar of our overall business portfolio,” Sony’s chief executive Kazuo Hirai said.
Sony wants to nurture new businesses as it retreats from money-losing television manufacturing, while Olympus needs cash to fix its depleted finances after an accounting scandal forced it to restate several years of earnings.
Although it fits Sony’s revival strategy, some analysts have questioned the cost of the acquisition in the wake of losses, arguing that a non-capital tie up would have made more sense.
Prompted by persistent weakness in its consumer electronics division, Standard & Poor’s cut Sony’s long-term debt rating by one notch to BBB, the second-lowest investment grade.
In selecting Sony as a partner, Olympus rejected offers from medical device maker Terumo and camera maker Fujifilm.
Rocked by the accounting scandal, Olympus booked a net loss of 49 billion yen in the year to March 31. In June, its ratio of shareholders’ equity to total assets fell to 2.2 per cent from 4.6 per cent in March. The figure is a barometer of a company’s liquidity, with the 20 per cent level regarded as indicative of financial stability.