Buyout: Terumo aims to merge with a post-scandal Olympus Corp.

July 26, 2012 by MassDevice staff

Japan's Terumo Corp. proposes a merger with Olympus Corp., aiming for a buyout to block rival companies' advances.

mergers and acquisitions

Asian medical device giant Terumo Corp. (TYO:4543) confirmed rumors of a proposed buyout of  Olympus (PINK:OCPNY) in the aftermath of a $1.7 billion accounting scandal.

Terumo offered a $640 million investment into Olympus, sending OCPYNY shares up 6% to a closing price of $17.44 last night. Terumo confirmed that it had proposed an investment and is looking to form a committee to investigate a joint holding company.

The move tops that of rival buyer Sony Corp. (TYO:6758), which yet remains part of the conversation, Bloomberg reported.

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Olympus, which has a corner on 70% of the endoscopic camera market, was rocked by a $1.7 billion accounting scandal exposed by former CEO Michael Woodford, who was sacked mid-October 2011 after only 2 weeks on the job.

If Olympus joins Terumo, which makes infusion systems, the resulting company would represent the 6th largest medical device company in the world, ranking just above Covidien (NYSE:COV) and just below Abbott (NYSE:ABT), according to a Terumo statement.

Terumo and Olympus are currently ranked 12th and 13th.

Olympus has been looking for strategic alliances to help it recover from a high-profile accounting scandal that sheared its stock value, split its board and executive leaders and launched a slew of regulatory investigations.