Olympus is Quitting the Camera Business

In an announcement released yesterday, June 24, 2020, on its website, Olympus Corporation said it is selling the business to Japan Industrial Partners, Inc. (JIP) after both companies revealed in a joint statement that they signed a memorandum of understanding to carve out Olympus’s imaging business to a new company "and subsequently transfer its shares to a fund managed, operated or otherwise handled by JIP."

"After the due diligence and further discussions and negotiations, the parties are aiming to sign a legally-binding definitive agreement for the transaction by September 30, 2020," with further announcements to be made "if any matters relating to the transaction (that) needs further announcemen.

Olympus's imaging business began with the manufacture and sale of a camera in 1936. Through innovative technology and unique product development capabilities, Olympus has developed and launched various products. Those products include the following: Olympus Pen, the innovative half-sized camera; Zuiko Pearlcorder, the world's first micro-cassette tape recorder; and Olympus OM-D series, the mirrorless interchangeable lens camera.

Olympus has implemented measures to cope with the extremely severe digital camera market, due to, amongst others, rapid market shrink caused by the evolution of smartphones; Olympus has improved the cost structure by restructuring the manufacturing bases and focusing on high-value-added interchangeable lenses, aiming to rectify the earning structure to those that may continue generating profit even as sales dwindles. Despite all such efforts, Olympus’s imaging business recorded operating losses for three consecutive fiscal years up to the term ended in March 2020.

Olymous hopes that by selling and operating its imaging business with JIP, operating the business's corporate structure "may become more compact, efficient and agile and it is the most appropriate way to realize its self-sustainable and continuous growth and to bring values to the users of its products as well as its employees working in the Imaging business," prompting Olympus to sell to sign the memorandum of understanding with JIP.

.JIP. in turn, is a private equity firm founded in 2002 and "has strong track records in supporting strategic carve-outs that realize growth potential and encourage autonomous growth." With the support of JIP, the company that will result from the acquisition of JIP of Olympus "will utilize the innovative technology and unique product development capabilities which have been developed within Olympus, and will realize continuous growth of the business by bringing better products and services to the users and customers and by making itself a productive and rewarding work place for its employees."

The resulting merger between the two companies "will succeed and maintain the research and development functions and manufacturing functions globally as reformed under the contemplated structuring reforms to continue to offer high-quality, highly-reliable products; and also continue to provide supports to the imaging solution products that have been distributed by Olympus."

Both Olympus and JIP hope to complete the acquisition by December 31, 2020.