Fujifilm Braces for Olympus Snub as Komori Tries to Avert Own Kodak Moment

Fujifilm Holdings Corp. (4901) may get snubbed by cross-town rival Olympus Corp. (7733) in its attempt to move further away from the photographic film business that dragged down industry pioneer Eastman Kodak Co. (EK)

“We aren’t too optimistic” that Olympus will welcome a takeover approach or collaboration, Chief Executive Officer Shigetaka Komori said in an interview at Fujifilm’s Tokyo headquarters. “Olympus will most likely to want to run the business by itself.”

The two companies together would control about 85 percent of the global market for the tiny cameras doctors use to peer inside the body, according to Komori. The 72-year-old CEO wants to add Olympus, which lost more than half its market value last year over an accounting scandal, to the 650 billion yen ($8.5 billion) of takeovers Fujifilm spent in the past decade to buffer it from a collapse in color film demand that pushed Kodak to the brink of bankruptcy last month.

Fujifilm is the best fit for Olympus, which has about 70 percent of the market for endoscopes, Komori said, adding that antitrust implications would need to be worked out. The devices are one of six growth pillars he has targeted for growth.

“Many of the things Kodak did were short-term and halfway measures, and they weren’t enough,” Komori said. “Japanese companies make long-term investments, looking 10 to 20 years ahead. That’s the difference between us and Kodak.”

Investors aren’t convinced. The shares tumbled 40 percent on the Tokyo Stock Exchange in the past 12 months, more than twice the drop of the Topix index. The stock was unchanged at 1,785 yen at the close in Tokyo trading, valuing the company at 919 billion yen. Olympus dropped 0.7 percent to 1,256 yen, the lowest in two weeks, with a market value of 341 billion yen.

‘Seeds for Growth’

“Fujifilm has planted the seeds for growth,” said Kogo Horie, a technology analyst at Daiwa Securities Capital Markets in Tokyo, who has a “neutral” rating on Fujifilm. “But I can’t see the overall strategy and synergies between the businesses it bought. It’s not yet clear how they will contribute to earnings.”

Komori, who joined Fujifilm in 1963 and became president in 2000, at the peak of global color film demand, has overseen more than 40 acquisitions and partnerships in industries ranging from pharmaceuticals to photocopy machines. Acquisitions include stakes in FujiXerox Co. for 160 billion yen in 2001 and a controlling stake in drugmaker Toyama Chemical Co. in 2008.

Fujifilm agreed to buy SonoSite Inc. (SONO), a maker of portable ultrasound machines, for about $1 billion in December.

More acquisitions can’t be ruled out in pharmaceuticals and medical devices if the right opportunities arise, Komori said in the interview. The company, which he says should resemble a conglomerate such as 3M Co., has a four-person team in charge of assisting with potential deals, he said.

Fuji Name Stays

Fujifilm, established in 1934, gets 44 percent of its revenue from printing, 41 percent from flat-panel display materials, optical devices, pharmaceuticals and medical systems, and 15 percent from color films and digital cameras.

Komori says he’s most excited by the potential of an experimental drug for Alzheimer’s disease. The product, known as T-817MA, is in mid-stage tests and may finish advanced studies in two to three years, according to the executive.

Komori, who has yet to name a successor, says he will probably run the company for at least another two to three years, when his burgeoning business units are better established. Meantime, Fujiflim, which has 2.2 trillion yen in annual sales and 81,300 employees, isn’t likely to undergo a name change, even as it tries to move away from the film business.

“The business is based on the technologies we’ve cultivated from developing color film,” said Komori. “Everyone knows Fujifilm through photos. It’s still a popular brand.”

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net.

To contact the editor responsible for this story: Jason Gale at

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