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Sony to pump ¥50bn into Olympus

Sep 28 2012 11:46 AFP

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Tokyo - Electronics giant Sony will invest ¥50bn in scandal-tainted Olympus, the firms said Friday, as they both look to turn the page on disastrous chapters.

The investment will make cash-bleeding Sony the single biggest shareholder in Olympus, with slightly more than 11% of its outstanding stock.

The companies will also establish a joint venture to develop endoscopes, with the focus on a type used in keyhole surgery, the statements said.

"At Sony 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," said Sony president Kazuo Hirai in a statement.

"The business and capital alliances we have agreed with Olympus today will be integral to these plans," he said.

Sony will take a ¥50bn yen private placement of Olympus shares by the fiscal year-end for ¥1 454 a share.

The price represents a saving on Olympus's shares on the open market, where they closed on the Tokyo Stock Exchange at ¥1 520.

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 worth of losses moved off its balance sheet.

The camera-maker has since announced a major overhaul that includes cutting about seven percent of its workforce, while its new boss had publicly said he was seeking a capital injection to shore up the company's finances.

Olympus reported a ¥4.46bn yen loss in the April to June quarter.

For the fiscal year to March, Olympus has said it expects to book a net profit of ¥7bn on sales of ¥920bn.

"Investment from Sony will help strengthen our financial base," said Hiroyuki Sasa, president of Olympus, in its statement.

The alliance will enable the embattled company to "contribute to world medical progress by developing a variety of new medical devices that would not be possible by Olympus alone", he said.

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

The once-world-beating maker of the Walkman 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.


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