TOKYO -- Olympus Corp. is ending a storied era of camera manufacturing after unveiling a plan to sell its loss-making imaging unit and focus on its core medical business.
The company started making cameras in 1936 and became one of the best recognized Japanese brands, with well-known models such as the Olympus Pen. But like many companies in the same lines of business, it has struggled to adapt to a market transformed by digital imaging and smartphones.
Olympus said on Wednesday that it had signed a memorandum of understanding to carve out its imaging business and transfer the shares to a fund run by Japan Industrial Partners, a private equity firm. The parties would aim to reach terms for a binding transaction by Sept. 30 and try to complete the deal by the end of the year, they said in a statement.
Olympus said it had tried to improve the unit's cost structure as sales declined by restructuring its manufacturing and focusing on high-value-added interchangeable lenses. "Despite all such efforts, Olympus's imaging business recorded operating losses for three consecutive fiscal years up to the term ended in March 2020," the company said.
In the 12 months to the end of March 2020, the imaging division booked revenues of 43.6 billion yen ($409 million), down 10% year on year, and an operating loss of 10.4 billion yen, compared with a loss of 18.3 billion yen in fiscal 2019.
The imaging business made up less than 6% of group revenues in the year to the end of March -- dwarfed by Olympus's sales of medical systems such as endoscopes and surgical devices.
Japan Industrial Partners was established in 2002 by Mizuho Securities and others. Major investment deals include the purchase of Sony's Vaio personal computer business in 2014 as well as Hitachi's electronic equipment subsidiary for 257 billion yen through a partnership with U.S. private equity firm KKR.
"JIP has strong track records in supporting strategic carve-outs that realize growth potential and encourage autonomous growth," Olympus said in its statement.