PRIVATE EQUITY firm TPG Capital is willing to invest about $1 billion (€790 million) in Japan’s Olympus in a joint deal with Sony or another suitor circling the scandal-hit firm, according to a person familiar with the situation.
TPG has informed executives at Sony, Canon, Fujifilm and Panasonic of its interest in providing capital and expertise to help revive the maker of medical equipment and cameras, the person said.
Olympus has been seeking a friendly investor to make a minority investment and help its business recover from a $1.7 billion accounting scandal that has crushed its stock price and left a big dent in its balance sheet.
Electronics firms such as Sony, Canon and Panasonic are keen on Olympus’s diagnostic endoscope business as part of their strategies to expand into healthcare, while Fujifilm is already in the profitable endoscope market, banking sources have said.
TPG had not received any indication so far from these strategic suitors that they would work with the private equity firm on a transaction, the person said, speaking on condition of anonymity.
TPG however believes it could be an effective partner by putting up capital, offering its experience in management, restructuring and the healthcare field and by taking over parts of the company the strategic investor does not want, the person said. A TPG spokesman declined to comment.
“My impression is that the chance of private equity getting involved in Olympus is 50-50,” said Tetsuro Ii, chief executive of Commons Asset Management.
“The strategic partner would need to eventually buy out the fund at a higher price, but the fact is, Olympus has made a lot of acquisitions to date, much of which will need to be disposed of or restructured. It probably makes more sense to work with a value-up fund to get that done.”
The list of potential suitors was thought to include Samsung Electronics, although the South Korean technology giant yesterday ruled out any chance of an equity investment in the firm. Sony, Canon, Fujifilm and Panasonic are seen as strong candidates to invest in and form an alliance with Olympus, attracted by its medical equipment business, the company’s crown jewel boasting profit margins of about 20 per cent. – (Reuters)
