Sony to inject ¥50bn to revive Olympus

ELECTRONICS giant Sony and scandal-tainted Olympus would formally agree to a capital tie-up on Friday, it was reported yesterday, as both companies look to turn the page on disastrous chapters.

The firms were expected to make an announcement following board meetings to approve the partnership, which would see them working together on medical equipment, the Nikkei business daily said.

Sony would take a ¥50 billion (R5.3bn) private placement of Olympus shares by the end of the year for slightly more than ¥1 400 a share, making it Olympus’s top shareholder, with a roughly 11 percent stake, the newspaper said.

The companies will establish a joint venture to develop endoscopes and other surgical tools packed with the Japanese electronics and entertainment maker’s three-dimensional imagery and super-clear display technology called 4, with the focus on a type used in keyhole surgery. Sony would hold a majority stake and appoint a senior official as the new company’s president, it said.

Olympus’s reputation was badly damaged after its British former chief executive blew the whistle last year on an accounting scam that saw $1.7bn (R14.1bn) worth of losses moved off its balance sheet.

The company has since announced a major overhaul that includes cutting about 7 percent of its workforce, while its new boss has said he was seeking a capital injection to shore up the company’s finances.

Three former executives have pleaded guilty to fraud.

The firm reported a ¥4.46bn loss in the quarter to June.

For the financial year to March, Olympus has said that it was expecting to book a ¥7bn net profit on sales of ¥920bn.

For Sony, which continues to lose money in its mainstay television business, strengthening its medical equipment business has been a stated management goal.

The former world-beating maker of the Walkman player lost a whopping ¥456.66bn in the year to March, its fourth consecutive annual loss.

It also reported a widening loss in its latest quarter and cut a profit forecast for the year.

Earlier this week ratings agency Standard & Poor’s downgraded its long-term corporate credit ratings on the firm to BBB, just two notches above junk status.