There were rumours in November that Olympus would shut down its camera business within 8 months, which was flat out denied by Olympus. Now, here we are, 8 months later, after several years of speculation and rumour and more denial, Olympus has indeed sold its camera and imaging business to a company called Japan Industrial Partners (JIP). It’s like “Surprise!” but not really.
Olympus posted the notification of signing a Memorandum of Understanding to the Olympus website, stating that Olympus had sold its imaging business to JIP. The legally-binding deal, they say, will be completed by September 30th, 2020. Here’s the complete statement from Olympus…
Signing of Memorandum of Understanding for Divestiture of Imaging Business
Olympus Corporation (“Olympus”) and Japan Industrial Partners, Inc. (“JIP”) hereby announce that, today, the parties signed a memorandum of understanding to carveout Olympus’s Imaging business to a new company (“NewCo”) and subsequently transfer its shares to a fund managed, operated or otherwise handled by JIP (the “Transaction”).
After the due diligence and further discussions and negotiations, the parties are aiming to sign a legallybinding definitive agreement for the Transaction (the “Definitive Agreement”) by September 30, 2020. We will promptly make further announcement if any matters relating to the Transaction that needs further announcement occur.
- Background and Purpose of the Transaction
Olympus’s Imaging business began with the manufacture and sale of a camera using the photographic lens Zuiko in 1936. Through innovative technology and unique product development capabilities, Olympus has developed and launched various products, aiming to contribute to make people’s lives more fulfilling. Those products include: 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 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.JIP has strong track records in supporting strategic carve-outs that realize growth potential and encourage autonomous growth. By adding support from JIP, the NewCo, as the successor of reputable brands such as “OM-D” and “ZUIKO,” 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.
- Imaging Business after the Transaction
NewCo 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.
- Outline of the Transaction
The specifics of the Transaction shall be decided in the Definitive Agreement after careful examination and consultation between the parties. The parties currently consider the outline of the Transaction shall be as follows.The parties will proceed with the actions and procedures for Transactions in full compliance with applicable laws including consultation obligations and other requirements under local employment laws.
- Structure : (i) Olympus’s Imaging business will be transferred to the NewCo by way of company split or otherwise, and then, (ii) shares in the NewCo will be transferred to a new company to be established by JIP.
- Signing of Definitive Agreement : Scheduled to be signed by September 30, 2020
- Closing : Olympus and JIP strive to close the Transaction by December 31, 2020.
- Structuring Reform
Prior to the closing of the Transaction, Olympus plans to implement structuring reforms to the Imaging business aiming to change the business structure of Imaging business to be 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
Exactly what will happen for the future of Olympus as the “NewCo” company transitions the Olympus Imaging business over to JIP remains to be seen. But as a business that’s been making some pretty big losses over the last few years, it seems like the smart move from the Olympus camp. Let’s just hope that JIP can turn things around and bring Olympus back to its former glory.
After 84 years in business, it would suck to see the Olympus name disappear from cameras – or simply turn into a shadow of its former self, like Kodak and Polaroid, licensing its name and brand to the highest bidder.
If this has been in the works for a while, though, it might explain why several more companies were added to the Micro Four Thirds System Standard Group earlier this year. If Olympus is stepping away from cameras and JIP decides it doesn’t want to deal with that anymore, then Panasonic is going to need new playmates while they’re busy focusing on the S1 series.