(Bloomberg) — The involvement of U.S. hedge fund ValueAct Capital Management in Olympus Corp.’s strategy and management is spurring the transformation of the world’s leading maker of endoscopes, Chief Executive Officer Yasuo Takeuchi said, boosting its stock price and profit.
Olympus’s shares have more than doubled since ValueAct persuaded Olympus to accept its director nominations in 2019 — a seldom seen victory for activism in Japan. That same year, Takeuchi took over the leadership, and ValueAct’s Rob Hale and two other external directors joined the board. They boosted the number of non-Japanese executives on the management team, cut jobs and sold off none-core assets while focusing its business on medical devices.
“We have committed that we will become a leading global med-tech company; that requires a lot of change, eventually the change in culture and any types of diversified opinions and viewpoints are very much welcome,” Takeuchi said in an interview. “I’m very glad that I have Robert Hale as a board member.”
Founded a century ago, Olympus made its name as one of Japan’s leading camera and endoscope manufacturers. It gained notoriety in 2011 when newly appointed CEO Michael Woodford was fired for exposing accounting irregularities, triggering a major corporate corruption scandal that dragged on for years. Now, with the camera industry decimated by smartphones and only a few niche players remaining, Olympus is betting on medical technology devices and building on its 70% share in the global gastrointestinal endoscope market.
While ValueAct is still on Olympus’s board, it no longer holds a significant stake, data compiled by Bloomberg shows. The fund, which has more than $12 billion assets under management, remains active in Japan. ValueAct won a board seat at a Japanese material maker JSR Corp. June last year, and is now pushing Seven & i Holdings Co. to improve the valuation of the company saying “shareholder intervention may now be necessary.”
Asked about Olympus’ business in Russia and Ukraine, Takeuchi said the company will continue to provide medical and surgical support regardless of logistical challenges. Olympus has about 150 employees in Russia and 7 staffers in Ukraine and sales in the region make up less than 10% of the global total, according to the company.
Takeuchi, who spent more than a third of his four-decade career at Olympus outside of Japan, is credited with more than doubling the company’s valuation; the stock hit a record in January.
“He has been delivering more than what he has promised,” Yukihiro Koike, an equities analyst at UBS Securities Japan Co., said of Takeuchi. “He really wants to change the company and is passionate about it.”
Olympus may also spin out its scientific solutions business, Takeuchi said, adding that the company is “very much actually looking into inorganic growth opportunities.”
Such a move that could free up as much as $5 billion for Olympus to spend on acquisitions, according to Koike.
“He could realize the job cut and the sale of its camera business in a short period of time because he had an ally who could pressure the company from outside,” Koike said.
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