Japanese electronics giant Sony signed the deal on Friday that sees it buying an 11% stake in the financially struggling, scandal-tainted Olympus for 50 billion yen (approx. $641 million) investment. Sony, also bleeding cash for years from its TV division, will now be recognized as the largest shareholder in Olympus, known for manufacturing cameras and medical equipment. The deal will be beneficial to both, as Olympus needs any and all of the support it can get, and Sony is looking to expand into the medical market with the former’s endoscope dominance.
Kazuo Hirai, Sony’s CEO, stated that the company is looking to aggressively pursue the expansion of their medical business with the hopes of becoming one of their key pillars. He adds that the alliance with Olympus is a vital part to these plans. For the endoscope development, the two companies are said to establish a joint venture which will focus on the tools used in keyhole surgery. While Sony has already been seen as adjusting its focus throughout this year, such as trying to rely more on video games and mobile devices, they still need to find new areas for growth to take the place of TVs, which used to be their primary meal ticket.
Olympus’ reputation was destroyed last year when $1.7 billion in losses, dating back about 10 years, was uncovered. President Hiroyuki Sasa said Sony’s investment will help strengthen their financial base. The company reported another 4.46 billion yen ($56.5 million) in losses for the April-June quarter of this year. Despite their poor condition, they still enjoy a 70% dominance of the endoscope market.[via The Republic]