Tue, Oct 25, 2011 - Page 10 News List

Olympus drops on report FBI probing adviser payouts

Bloomberg

Olympus Corp, under fire from shareholders amid questions about US$687 million in payments to advisers, plunged in Tokyo trading after a report the US Federal Bureau of Investigation is probing the maker of optical equipment.

Tokyo-based Olympus fell 11 percent to close at ¥1,099 on the Tokyo Stock Exchange yesterday, dropping to its lowest since October 1998. The benchmark Nikkei 225 Stock Average gained 1.9 percent.

The FBI is investigating payments by Olympus to advisers on a 2008 acquisition, the New York Times reported, citing two people briefed on the case, without disclosing their names. The paper said the payout was more than 30 times the normal amount for similar deals.

Tsuyoshi Kitada, a spokesman for Olympus in Tokyo, said the company had no information on any FBI investigation.

“Uncertainty about Olympus’ management and the M&A [merger and acquisition] payments has increased,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co in Tokyo. “Foreign fund managers and short-term speculators are selling the shares.”

Shareholders including Nippon Life Insurance Co have called for more information about the adviser payments, which were revealed by Michael Woodford, who was fired as chief executive officer on Oct. 14.

Olympus on Wednesday said it paid US$687 million in fees, including a US$443 million buyback of preferred shares, in connection with the US$2 billion purchase of Gyrus Group PLC in 2008. Chairman Tsuyoshi Kikukawa said on Tuesday last week the amount was only about half that much.

Shares of the world’s biggest maker of endoscopes have fallen by 56 percent, erasing more than US$4.5 billion in market value, in the seven trading days since Woodford was fired. Woodford, Olympus’ first non-Japanese CEO, has said he was ousted for challenging the payments to advisers on the Gyrus transaction.

“The situation is still unclear and may take a while to settle,” Mitsuo Shimizu, an analyst at Cosmo Securities Co in Tokyo, said by telephone.

“That’s worrying investors and prompting them to unload their stakes,” Shimizu said.

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