Olympus Drops on Report of FBI Investigation

By Norie Kuboyama and Naoko Fujimura - Oct 24, 2011 5:01 PM GMT+0700

Olympus Corp. (7733), under fire from shareholders amid questions about $687 million in payments to advisers, plunged in Tokyo trading after a report the U.S. Federal Bureau of Investigation is probing the maker of optical equipment.

Tokyo-based Olympus plunged 11 percent to 1,099 yen at the 3 p.m. close on the Tokyo Stock Exchange, dropping to its lowest since October 1998. The benchmark Nikkei 225 (NKY) 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. Byron Tsao, a spokesman at the U.S. embassy in Tokyo, referred inquiries to the FBI in Washington D.C.

“Uncertain ty about Olympus’ management and the M&A 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 C. Woodford, the chief executive officer who was fired on Oct. 14.

Adviser Fees

Olympus on Oct. 19 said it paid $687 million in fees, including a $443 million buyback of preferred shares, in connection with the $2 billion purchase of Gyrus Group Plc in 2008. Chairman Tsuyoshi Kikukawa said on Oct. 18 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 $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.”

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Naoko Fujimura in Tokyo at nfujimura@bloomberg.net