Tokyo, Japan—Olympus Corporation signed a memorandum of understanding (MOU) with Japan Industrial Partners, Inc. (JIP), on June 24 to transfer its long-standing photo-imaging business to JIP.
According to the MOU, both companies are committed to further discussions about the transfer of Olympus’s imaging business by year’s end. The imaging business includes digital cameras and lenses as well as IC recorders.
During the ongoing discussions, Olympus’s Imaging division will continue business as usual. Moreover, sales, service and marketing departments will continue to support customers passionate about photography with Olympus products and services.
“We believe this is the right step to preserve the legacy of the brand; the value of the technologies; and the outstanding products,” wrote Yasuo Takeuchi, director, representative executive officer, president and CEO. “Olympus sees this transfer as an opportunity to enable its Imaging business to continue providing value to longtime and new customers, fans and photography enthusiasts.”
Divestiture of Imaging Business
Basically, Olympus and JIP will carve out Olympus’s Imaging business to a temporary new company. Subsequently, Olympus will transfer its shares to a fund managed, operated or otherwise handled by JIP.
After due diligence and further negotiations, the two will sign a legally binding definitive agreement by September 30, 2020. At that time, they will make further announcements relating to a new photo-imaging company.
“Olympus implemented measures to cope with the extremely severe digital camera market, due to, amongst others, rapid market shrinkage caused by the evolution of smartphones. Olympus improved the cost structure by restructuring the manufacturing bases as well as focusing on high-value-added interchangeable lenses; aiming to rectify the earning structure to those that may continue generating profit even as sales dwindle. Despite all such efforts, Olympus’s Imaging business recorded operating losses for three consecutive fiscal years up to the term ended in March 2020,” explained Takeuchi.
Under the circumstances, Olympus believes that by divesting its Imaging business and operating the business with JIP, the business’s corporate structure may become more compact, efficient and agile.
“[I]t is the most appropriate way to realize its self-sustainable and continuous growth and to bring values to the users of our products as well as our employees working in the Imaging business,” Takeuchi added.
What’s more, JIP has a strong track record in strategic divestitures that have realized growth potential. Further, the two companies believe by adding JIP’s support, the new imaging company, as successor of the OM-D camera and Zuiko lens brands, will utilize Olympus’s product development capabilities and technologies to realize continuous growth.
In addition, the new company will maintain the R&D and manufacturing functions globally under new structuring. Takeuchi also noted that it will “continue to offer high-quality, highly reliable products.” Furthermore, it will continue to support existing Olympus imaging products.
Olympus Corp. will transfer its Imaging business to a new temporary company by way of a company split or otherwise. Then, shares in that new company will transfer to another new company that JIP will establish.
While signing of the definitive agreement is scheduled for September 30, 2020, the transaction will close by December 31, 2020.
Moreover, prior to the closing, Olympus will implement restructuring reforms to its Imaging business aimed at making it more profitable and sustainable.
“We are currently investigating costs and other impacts of the structuring reform. If any future event which requires disclosure arises, Olympus will announce it promptly,” Takeuchi concluded.
Olympus’s Imaging business began with the manufacture and sale of a camera using a Zuiko photographic lens in 1936. Through innovation and unique product development capabilities, Olympus developed and launched various consumer-oriented products over the years. Notable products include the Olympus Pen half-sized camera; the Zuiko Pearlcorder, a microcassette tape recorder; and the Olympus OM-D series of mirrorless interchangeable-lens digital camera.
Olympus Corp. has regional headquarters worldwide. Olympus Corporation of the Americas is located in Center Valley, Pennsylvania.