Olympus is in talks with Sony and Panasonic to determine which of the two companies will be its capital partner, as the ailing Japanese company looks to raise "tens of billions of yen".
According to The Asahi Shimbun's report on Wednesday, the optical equipment maker is likely to make its decision on which company to partner with by the end of June. Unnamed sources added that Olympus is looking for investments in the "tens of billions of yens" region, with 10 billion yen worth approximately US$126 million currently, and the capital partner is likely to take a stake of more than 10 percent in the company.
"There is no option to reject outside capital," the sources, citing an Olympus official, told the Japanese newspaper.
The plan also calls for the laying off of 2,500 workers from Olympus' 34,000-strong workforce as it aims to boost sales to 1.1 trillion yen (US$13.9 billion)--30 percent more than fiscal year 2011. Sources told The Asahi Shimbun sales will mainly be through making its digital camera operations profitable and expanding its endoscope business. These business plans that will span to 2016 will be announced by Olympus President Hiroyuki Sasa on Jun. 8, they added.
The latest development to raise funds and streamline operations was driven by the fact that the Japanese company projected its capital adequacy ration in three years to be "substantially lower" than rival companies in the same sector, the report stated. Olympus shareholders are also seeking damages over last year's accounting scandal and the company requires large amounts of funds to expand its endoscope business among other steps, the sources revealed.
There is, however, strong opposition to a capital tie-up within the company, and Sasa has been taking a "cautious" approach, it noted.
Both potential capital partners have also been struggling to adapt to the challenging economic climate. Panasonic was reportedly considering shedding 3,000 to 4,000 employees from its headquarters to streamline its business and stem losses, while Sony is said to be planning to cut 6 percent of its global workforce as part of a massive restructuring to bring it back to profitability.