Sony will invest in an ailing Olympus and become its largest shareholder

sony olympus deal Last spring, in the wake of Olympus’ financial mess, it became clear that the legacy digital imaging enterprise would have to rely on the investment of competitors to keep its business alive. The rumor mill pegged Panasonic, Fujifilm, and Sony as the likeliest to make a deal with the struggling company – which was found to be hiding some $1.7 billion in debt.

Now, it appears Sony will invest $642 million in Olympus, making it the manufacturer’s largest shareholder. According to Reuters, Sony is about to approve the plan that will give it a 10 percent stake in Olympus. “Sony will set up a joint business with Olympus to develop new medical equipment, and next year will send an executive to join its board of directors,” say Reuters’ sources.

While Olympus is known to the consumer world for its cameras, it’s the company’s multibillion dollar endoscope business that is the source for most of its revenue. And according to Reuters, Sony wants in on some of that profit in order to offset “loss-making televisions.” It’s a way for Sony to broaden its portfolio and get into a more stable, high-demand market. And, of course, it’s a way for Olympus to claw its way back to a healthy financial status.

As news of the deal breaks, the company and a handful of its former executives – including former president Tsuyoski Kikukawa — have plead guilty to covering up the years of investment losses. “There is no mistake. The entire responsibility lies with me,” Kikukawa said in court yesterday.

The news means little to the larger consumer market: The deal won’t impact digital camera manufacturing, so don’t expect some Sony-meets-Olympus device to hit shelves (although with Sony’s impressive big sensors in small packages and Olympus’ trailblazing Micro Four Thirds cameras, enthusiasts can dream, right?).