Tuesday, October 18, 2011

Olympus under pressure to disclose details on deals

TOKYO: Japan's Olympus came under more pressure to disclose details of payments made in a series of acquisitions as its shares tumbled 6 percent on Tuesday, Oct 18 in the third consecutive daily fall following the unexpected dismissal of its chief executive last week.

British former CEO Michael Woodford has told media he believes he was ousted for probing what he said were excessive payments made in relation to the buyouts of Britain's Gyrus and three small domestic firms.

The Japanese firm reiterated in an investor conference call late on Monday that Woodford was dropped because of a clash in management styles and said the company may take legal action against him for disclosing confidential information in media reports following his firing.

But analysts and investors remain dissatisfied after Woodford showed media a letter dated Oct. 11 to chairman Tsuyoshi Kikukawa, which describes what Woodford calls "a catalogue of calamitous errors and exceptionally poor judgement".

The letter details Woodford's concerns about $680 million in payments to financial advisers in the acquisition of Gyrus, or around 36 percent of the transaction price, and $600 million in goodwill impairment after acquisitions in Japan.

In it, he also calls on Kikukawa to resign.


Hisashi Mori, executive vice president at Olympus, told analysts on Tuesday, that the amount paid in relation to Gyrus, which included cash and options, was less than half the amount Woodford stated, although he conceded that the fee was high.

"We do not think the market's confidence can be restored based on what we heard during the conference call," said analyst Motoya Kohtani of Nomura in a note to clients.

"With a former president playing the unusual role of whistle blower, the level of disclosure by Olympus thus far is unlikely to alleviate market concerns," he added.

"We think management should disclose the advisory fees paid for the Gyrus acquisition, broken down into preferred dividend stock, options and cash."

Olympus shares fell to a fresh 2-1/2-year-low of 1,455 yen early on Tuesday, before paring losses to trade down about 4 percent in early afternoon. The stock lost 37 percent of its value, worth $3.2 billion, in the prior two days, following Woodford's dismissal and his comments to the media.

Downgrades on its target prices by brokerages, including Macquarie, continued after the investor call on Monday.

Woodford told the Financial Times he had taken documents on the acquisition of Gyrus to Britain's Serious Fraud Office on Monday and said he welcomed further investigation of the case.

Japan's Financial Services Agency said it was aware of media reports on Olympus, but declined to comment on whether it was considering taking action. - Reuters

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