Sony, Olympus to sign tie-up Friday

Electronics giant Sony and scandal-tainted Olympus will formally agree a capital tie-up on Friday, a report said, as both companies look to turn the page on disastrous chapters. The firms are expected to make an announcement following board meetings to approve the partnership, which will see them working together on medical equipment, the Nikkei business daily said. Sony will take a 50 billion yen ($645 million) private placement of Olympus shares by year-end for slightly more than 1,400 yen a share, making it Olympus's top shareholder, with a roughly 11 percent stake, it said. The companies will establish a joint venture to develop endoscopes, with the focus on a type used in keyhole surgery. Sony will hold a majority stake and appoint a senior official as the new firm's president, it said. Olympus's reputation was badly damaged after its British former chief executive blew the whistle last year on an accounting scam that saw $1.7 billion worth of losses moved off its balance sheet. The camera-maker has since announced a major overhaul that includes cutting about seven percent of its workforce, while its new boss has publicly said he is seeking a capital injection to shore up the company's finances. The firm reported a 4.46 billion yen loss in the April to June quarter. For the fiscal year to March, Olympus has said it expects to book a net profit of 7.0 billion yen on sales of 920 billion yen. For Sony, which continues to lose money in its mainstay television business, strengthening its medical equipment business has been a stated management goal. The once-world-beating maker of the Walkman lost a whopping 456.66 billion yen in the year to March, its fourth consecutive annual loss. It also reported a widening loss in its latest quarter and cut a profit forecast for the year. Earlier this week ratings agency Standard & Poor's downgraded its long-term corporate credit ratings on the firm to BBB, just two notches above junk status.