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Publication Date : 31-07-2012
Competition has been heating up among companies trying to form a capital alliance with optical equipment manufacturer Olympus Corp., which has been struggling to revive itself in the aftermath of its recent loss cover-up scandal.
In a bid to secure an advantage in the battle for control of Olympus, Terumo Corp., a major medical equipment maker, on Thursday made public its proposal for a merger by creating a joint holding company.
It is extraordinary that information relating to a corporate merger and acquisition in Japan has been made public by a company seeking to acquire another while negotiations between the two are ongoing.
Sony Corp. is believed to be the front-runner in the merger and acquisition talks involving Olympus.
Terumo's action is an attempt to turn the tables in the capital and business alliance negotiations with Olympus, according to sources familiar with the matter.
As part of its proposal, Terumo has committed to invest 50 billion yen (US$639 million) in Olympus and create a joint consultative panel to discuss setting up a joint holding company.
Under a joint holding company system, Olympus could retain some degree of independence after the proposed integration, the sources said.
If the two firms are integrated, the holding company would be at least the world's fifth-largest medical equipment maker in terms of sales, Terumo said.
In a move likely designed to convince the management and shareholders of Olympus about the positive aspects of a merger with Terumo, the latter said, "The innovation that will be created by fusing technology of the two companies will help reinvigorate Japan's industries."
In a bid to recover from the decline in its financial foundation as a result of the loss cover-up scandal, Olympus has been in negotiations with Sony, Terumo and other companies such as Fuji Film Holdings Corp. for a capital alliance.
Olympus is likely to decide on its alliance partner by the year's end, the sources said.
Sony is the strongest candidate, since Olympus is placing high importance on the synergetic effects of imaging equipment products such as digital cameras, they said.
Terumo's approach is to directly persuade the shareholders and executives of Olympus of the effectiveness of the synergy that would be created as a result of a merger of the two firms' medical equipment operations, the sources said.
Commenting on Terumo's overture, Olympus announced Thursday the company was "studying carefully capital alliance offers from several companies." The sources said Olympus is wary about forming an alliance with Terumo because Olympus executives are displeased with Terumo's abruptly announced proposal.
In the 2011 financial year that ended in March, Olympus suffered a 48.9 billion yen loss in the consolidated settlement of its accounts, compared with a 3.8 billion yen profit the year before.
The company continues to enjoy the world's top market share of endoscopes, the demand for which is considered certain to expand in the future. This will ensure the contest for control of Olympus will likely be fierce over the next few months, the sources said.