Olympus President Shuichi Takayama bows after speaking at a news conference in Tokyo earlier this month. Japan's scandal-hit Olympus on Monday forecast a $410 million full-year net loss due to its ailing camera business and tax asset write-downs, despite the strength of its core endoscope business. / Korea Times file

Samsung will make move for Olympus’ healthcare biz

By Kim Yoo-chul

Samsung Electronics is ready to spend 2 trillion won (about $1.8 billion) to absorb the healthcare business of struggling Japanese competitor Olympus, industry sources told The Korea Times.

While officials of the Korean technology giant have been declining to speak officially about the plans, one company insider says a variety of options are being considered in terms of share investment, which include an outright acquisition of the Olympus unit.

The last time Samsung was involved in talks for a technology sector mega-deal was in 2008 when it appeared to be in play for American storage giant SanDisk, although it eventually pulled out of contention.

While Olympus has been struggling in consumer electronics, it still has a 70 percent share in the global market for flexible diagnostic endoscopes and boasts a strong presence in other medical equipment fields.

It could be a good fit for Samsung, which sees healthcare among its future growth engines, although it will have to beat Japanese rivals Sony and Fujifilm should it decide to throw its hat into the ring.

``An obstacle is the Japanese government’s restrictions on allowing foreign investment in a company that posses sophisticated technology that could be easily used for military purposes. Nonetheless, the Samsung interest is real,’’ said the source.

``Things could play out in a way that money is less of an obstacle than public sentiment in Japan, where there is weariness of the rise of Samsung and other Korean brands that are taking global market shares from traditional Japanese giants.’’

Acquiring Olympus’ healthcare unit, or even the division that produces diagnostic endoscopes, would enable Samsung a chance to make an early splash in the global markets for medical equipment, he said.

``Samsung recently increased its investment budget for medical equipment to 2.8 trillion won by 2020 and has been spending more money on magnetic resonance imaging (MRI), CT and endoscope-related businesses. So it’s easy to imagine the company absorbing a rival that is established in such markets,’’ said another source.

It earlier had planned to invest 1.2 trillion won through 2020 to create itself a building block for a global healthcare business.

The company’s public relations officials declined to comment on the issue. Cho Hae-young, a spokeswoman for Olympus’ Korean office, was unable to provide detailed information, although she admitted that a potential deal between the companies would be significant as endoscopes remain a major cash cow for Olympus.

In November last year, Samsung acquired U.S.-based medical equipment manufacturer Nexus, which develops cardiac-testing equipment and solutions. It also purchased a 43.5 percent stake in Korean ultrasound equipment maker Medison last year.



Many ways to fry fish

There is also a possibility that Samsung could join hands with Japanese rival Panasonic to acquire Olympus’ healthcare unit should its independent bid fail.

Panasonic officials in Korea said a strategic partnership makes sense for the company, which produces image sensors and lenses used in Olympus’ premium cameras.

``Samsung is investing more for camera technologies, especially in switch-lens models. The company is hiring more experienced experts for mirrors because the camera business, which continues to win more budgets. Its interest in Olympus could be multifaceted,’’ said another industry official.

Samsung officials, however, denied the company having an interest in Olympus’ money-losing camera division.

Sony, Panasonic and Fujufilm made public their interests the firm, now in need of capital after being swamped by a big accounting scandal.

Olympus President Shuichi Takayama said earlier he will consider all options to restore capital after slashing net assets by 70 percent following revelations that the company had falsified accounts to hide investment losses for more than a decade.

``So far, Samsung has been passive in major deals as it is very conservative about big investments in unproven territories. But the company believes it’s sustainable considering its undeniable status in component-making such as flat screens and memory chips and its global presence in smartphones,’’ said the unnamed source, who only asked to be identified as an ``industry executive.’’