Olympus and Japan Industrial Partners Inc. (JIP) issued a joint statement to calm the waters concerning the sale of Olympus’ Imaging Business to JIP. JIP assures existing Olympus customers that by “assuming the R&D and manufacturing frameworks, the New Imaging Company would commit to deliver high quality and reliability products and services to the Olympus customers around the globe.”
From Investopedia: A carve-out is the partial divestiture of a business unit in which a parent company sells a minority interest of a subsidiary to outside investors. A company undertaking a carve-out is not selling a business unit outright but, instead, is selling an equity stake in that business or relinquishing control of the business from its own while retaining an equity stake. A carve-out allows a company to capitalize on a business segment that may not be part of its core operations.
From 10xebitda.com – Private Equity Carve-Out Lessons 101: Private equity investors love corporate carve-outs. Corporate carve-outs is a private equity buyout strategy that offers superior returns for the distinguishing investors.
From Sun Capital Partners, Inc. – The Art of the Corporate Carve-Out: Most management teams in carve-out situations have felt handcuffed in improving their businesses due to under investment, lack of authority or conflicting corporate mandates. These businesses and management teams have made lots of sacrifices as a non-core business and it is very liberating to be autonomous. This creates significant opportunities. That said, the process of separating from a parent company can also be very challenging from a cultural and operational standpoint.
There may be hope then for Olympus Imaging Business (or, the “New Imaging Company”) if JIP management really invests in the new company, injects some kind of business discipline and eventually gets it to profitability while researching, designing, manufacturing, selling and supporting high-quality OM-branded cameras and Zuiko-branded lenses.
However, I have to admit there’s a pit in my stomach that tells me it’s not going to go the rosy path. In an interview with Mr. Ayataka Kiyomiya, the Vice President of Global Marketing Planning for the Olympus Imaging Division by Dave Etchells of Imaging Resource, it is made clear that the “carve-out” is probably a misnomer because “the Imaging business will be split from Olympus to become a completely standalone company. It will not be either a partnership nor a joint venture.” Olympus wants to make a clean break with what it considers a non-core business. Then, all bets are off.
If you want to know what I think of the future of Olympus’cameras, click here.
Regarding Olympus Imaging Business Transfer
July 16, 2020
Japan Industrial Partners Inc.
Olympus Corporation (“Olympus”) and Japan Industrial Partners Inc. (“JIP”) signed a memorandum of understanding on June 24th regarding the carve-out of Olympus’ Imaging business to a new company (the “New Imaging Company”) and the subsequent transfer of its shares from Olympus to funds managed, operated and advised by JIP.
Founded in 2002, JIP, a leading private equity firm based in Tokyo, specializing in corporate carve-out investments, targets revitalization of traditional businesses in Japan and has provided capital and management support to businesses carved out from established companies.
JIP’s investment principle is to realize potential growth opportunities by making maximum use of existing business foundation and technologies that the investee companies and businesses have. JIP believes that by delivering value-added products and services to customers and by building an attractive company for employees, the business will be able to realize its full potential and seek growth opportunities.
The New Imaging Company would assume and build growth strategy around the renowned Zuiko, OM and other brands, featuring optical and lens technologies developed and cultivated by Olympus over decades. Assuming the R&D and manufacturing frameworks, the New Imaging Company would commit to deliver high quality and reliability products and services to the Olympus customers around the globe.
On July 2nd, Olympus made a global announcement regarding the latest M. Zuiko Digital Lens roadmap. The lens introduction plans presented in this roadmap will continue to be carried out even after the business transfer occurs.
New product development for each product category within the Imaging business will continue and we will keep you up to date as we make progress.
Olympus and JIP will make all necessary preparations for a smooth transfer of the Imaging business, and JIP is committed to make maximum efforts so that the new company will increase its presence within the global market as a vibrant and energetic venture.