Camera pioneer and co-founder of the 4/3 format Olympus Corp. reached an agreement with Japan Industrial Partners Inc. (JIP) to sell its 84-year-old camera business to JIP for an undisclosed amount. Olympus’ statement said the two plan to sign a legally binding deal by Sept. 30 and close the transaction by Dec. 31, 2020. Olympus’ commitment to the digital camera category has been questioned by industry insiders for some time; last week, the company said it would not exhibit in the upcoming PhotoPlus Expo in New York City.
Japan Industrial Partners bought Sony Corp.’s popular Vaio laptop group in 2014 and turned it into Vaio Corp., so it has experience in reviving struggling consumer tech divisions. In recent years, consumer brands like Polaroid and Kodak have been sold off to independent firms that keep the brands alive by licensing them to various products. While it’s unlikely we’ll see Olympus-brand TVs – as we have seen with both Polaroid and Kodak licensees – it’s in our opinion we will see a continued influx of Olympus brand photographic gear. Just as “Vaio laptops” are now stylish but not necessarily groundbreaking in terms of technology, future Olympus products may be marketed as solid budget performers in a static market.
While Olympus pioneered small and compact SLRs and interchangeable lens cameras for decades, the company’s primary business pivoted to medical equipment such as endoscopes. The camera segment, which comprises only 5.5% of the revenues, had been losing money for three years.
Coping with severe decline in demand
Relevant portions from the company announcement:
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 3 consecutive fiscal years up to the term ended in March 2020. Under such circumstances, Olympus considers that, by carving-out the Imaging business and by operating the business with JIP, the Imaging 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 our products as well as our employees working in the Imaging business. Olympus therefore has decided to sign the memorandum of understanding for the Transaction.
According to Bloomberg, Olympus has been implementing restructuring measures since U.S. hedge fund ValueAct Capital Management, which owns 5% of the company, added two directors to the board.