Samsung not Seeking Stake in Olympus but Open to Alliance

(Reuters) -- Samsung Electronics ruled out making a bid for the healthcare business of Japan's troubled Olympus Corp on Friday, though a source close to the South Korean firm said it remained open to some form of non-equity partnership.

Olympus is looking for a friendly investor to inject capital and take a minority stake in the maker of cameras and medical equipment, which needs fresh equity after being swamped by a $1.7 billion accounting scandal, one of Japan's worst.

Electronics firms have been expanding into healthcare, leading to speculation that Samsung and Japanese rivals Sony and Panasonic would be interested in Olympus' big, profitable and stable business in diagnostic endoscopes.

But Samsung Electronics Chief Executive Choi Gee-sung dismissed suggestions his firm, a global leader in smartphones, televisions and memory chips, would want to buy Olympus' assets or at least invest as an equity partner in the business.

We're not interested in what others are already doing very well. Samsung will do what we can do better, Choi told Reuters on the sidelines of the Consumer Electronics Show in Las Vegas.

An executive at parent Samsung Group, however, said Samsung Electronics was interested in a more modest, non-equity alliance, though he declined to give details.

We are not that interested in Olympus ... Olympus is in a very difficult situation. It may want more than just an alliance or cooperation, the executive said on condition of anonymity as he was not authorized to speak to the media.

Samsung's major Japanese rivals, Sony and Panasonic, have already shown interest in Olympus, sources said.

Olympus is best known for cameras, but makes most of its money in healthcare, dominating the market for gastro-intestinal endoscopes, which are used to peer into patients and help diagnose cancers, ulcers and other conditions.

Olympus has about 70 percent of the global market for flexible diagnostic endoscopes and this business appears to have weathered the accounting scandal, which has wiped out about 40 percent of its market value and left its management in disgrace.

Any major foreign investment in Olympus could run into opposition in Japan, where the firm's endoscope technology is seen as strategic, in part because of the country's high incidence of stomach cancer.

The Japanese government can halt an investment of 10 percent or more in a listed firm, or 1 percent or more in an unlisted company, if foreign ownership would affect national security, a regulation some say might be applied to optical technology.

An analyst in Hong Kong said optical technology was potentially just what Samsung Electronics might be interested in.

Samsung Electronics may want long-term cooperation with Olympus in optical technology, an area in which Samsung is at the bottom. Optical technology is one of the areas where it has not caught up with Japan, said Hwang Min-seong, a technology analyst at Samsung Securities.

An equity tie-up is not easy, added Hwang, who had no direct knowledge of the Samsung group's thinking.

Olympus remains a thorny takeover target for potential bidders because the multi-national remains under investigation by police, prosecutors and regulators at home as well as by law-enforcement agencies in the United States and Britain.

Its disgraced senior management and board is also in disarray, with shareholders not expected to vote in a new board, including chairman and chief executive, until March or April when Olympus has said it will convene an extraordinary meeting.

We don't make such decisions hastily. Time is on our side, the Samsung Group executive added.

Olympus' listing status is also under a cloud, though risks of it being delisted from the Tokyo Stock Exchange appear to be fading with public broadcaster NHK reporting on Friday that the exchange was set to decide to keep Olympus on its boards.

The exchange is likely to hold an extraordinary executive meeting to decide Olympus' fate as early as January 20, NHK added. The exchange said in a statement that nothing had been decided.

Olympus shares last traded down 1 percent at 1,255 yen, valuing the company at around $4.4 billion.

(Writing by Mark Bendeich; Editing by Neil Fullick)