Sony Corp. (6758) and Olympus Corp. (7733) may announce a tie-up today, pending approval from their boards, in a deal giving Japan’s biggest consumer-electronics exporter a stake of about 10 percent in the endoscope maker, according to two people with knowledge of the plan.
The companies will have board meetings today to discuss a proposed alliance that includes a 50 billion-yen ($644 million) investment by Sony in new shares of Olympus, the people said, declining to be identified because the plan is private. Sony will place one executive on Olympus’s board, and the two companies will start a venture to develop endoscopes, they said.
The maker of Bravia TVs is seeking to expand in the medical devices sector as Chief Executive Officer Kazuo Hirai seeks to revive the company after four consecutive annual losses. Olympus, which admitted to a 13-year accounting fraud last year, has been trying to shore up its capital ratio as it recovers from the scandal that led the company to restate earnings and replace its entire board.
“There can be synergies between the two companies as Sony’s image sensors can be used in endoscopes,” said Yuji Fujimori, a Tokyo-based analyst at Barclays Plc. “Still, it may take time for their businesses to bring results as medical equipment usually needs regulatory approval before going on sale.”
The Nikkei reported the news earlier today, saying Sony will buy new Olympus shares at more than 1,400 yen by Dec. 31. George Boyd, a Sony spokesman, declined to comment. Olympus said in a note to the stock exchange it wasn’t the source of the report.
Sony declined 0.2 percent to 927 yen as of 11 a.m. in Tokyo trading and is down 33 percent this year. Olympus advanced 1.3 percent to 1,514 yen, extending the gains this year to 50 percent.
Olympus, based in Tokyo, restated five years of earnings in December and took a $1.3 billion cut in its net assets after admitting it paid inflated fees on takeovers and overpaid for three Japanese companies to conceal past investment losses.
The company wants to increase its capital ratio -- the ratio of equity capital to total assets -- to more than 30 percent by March 2017 from 2.2 percent as of the end of June. President Hiroyuki Sasa in June said a tie-up may help accelerate growth in its camera and medical businesses.
Sony, the maker of PlayStation game consoles and Cyber-shot cameras, wants to speed up a move into health equipment by using the edge its image sensors have over rivals, Hirai said in April. Sony’s medical business has the potential to be one of the company’s main sources of profit in the future, he said.
Sony plans to generate 50 billion yen in annual sales from equipment such as printers, monitors, cameras and recorders for the medical industry in the year ending March 2015, he said at that time.
The company last year acquired Micronics Inc., a Redmond, Washington-based developer of devices used for disease diagnosis, treatment monitoring and blood testing, for an undisclosed amount. Sony may purchase more firms to expand in life-science businesses, the company said in April.
Sony, which is cutting 10,000 jobs to return to profit, is spending 80 billion yen to boost its production capacity of complementary metal-oxide semiconductors, or CMOS, by one-third for 2013. The sensors, used in consumer-electronics devices such as smartphones and compact cameras, can also be used in medical equipment such as endoscopes, the company said in January.
Olympus shares have more than tripled in the past 10 months. The stock collapsed since the board fired president Michael Woodford on Oct. 14 after he questioned fees paid by the company for takeovers.
Net assets of Olympus fell to 23 billion yen in the three months ended June from 48 billion yen in the year ended March 31, the company said in August. The net loss widened to 4.5 billion yen in the three months ended June 30, compared with a 1.4 billion yen loss a year earlier.
Olympus is also cutting 2,700 jobs, or 7 percent of its workforce, and on Aug. 24 said it agreed to sell its subsidiary ITX Corp.’s telecommunication business for 53 billion yen to boost capital.
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