Olympus ($OCPNY) is seriously mulling whether to raise about $628 million to bolster its finances in the wake of a massive accounting scandal. The odds are 50/50 that the Japanese maker of endoscopes and cameras will do this either by forming an alliance with a competitor or selling shares to the public, company president Hiroyuki Sasa confirmed to Bloomberg.
Sasa told Bloomberg that an alliance would allow Olympus to pursue its own business strategy. And the company has already resumed discussions with companies, such as Sony, Panasonic and Fujifilm, among others, on forming just such a relationship.
Fujifilm CEO Shigetaka Komori said in a previous interview that he would welcome an alliance, even though Olympus hadn't seemed interested then, Bloomberg noted. And Panasonic had been rumored as recently as two weeks ago to want to invest as much as $635 million into Olympus, which would make it the company's largest shareholder. Such an alliance would also make sense, considering Panasonic makes lots of medical device-related products, including flat panel display monitors and radiation measurement systems.
At least one analyst sees Olympus' endoscope business as the biggest lure for any sort of partnership, considering the division is Olympus' largest business segment and represents two-thirds of the global market. An alliance would help the other company win new customers or expand into the medical equipment industry, Tomoki Komiya, an analyst with Mitsubishi UFJ Morgan Stanley Securities said in the Bloomberg story.
But the selling of shares could also help propel new growth for Olympus' medical equipment/endoscopy business and also sell more cameras, Bloomberg notes. Sasa told the news service that Olympus hasn't set a final deadline for a decision but wants to make one "as soon as possible, even tomorrow if that's possible."
Either way, something must be done. Olympus acknowledged late last year that it hid $1.7 billion in loses over 20 years, a scandal that lead to new leadership, a new board and the loss of nearly half the value of its shares. Olympus has launched a slew of medical equipment products since then, and is slashing 2,700 jobs and restructuring plants to bolster its finances. As Bloomberg points out, the company's stock has actually gained 17% so far this year.
- read the Bloomberg story