ValueAct's board seat pushed Olympus to sell its struggling camera business

Olympus, once famous for cameras, had been rebuilding since a 2011 accounting scandal. By 2018 its medical equipment business was the growth engine while the historic imaging unit was losing money as smartphones destroyed the camera market. ValueAct began buying shares more than a year earlier and emerged as a top shareholder with a 5.04% stake in May 2018.

In January 2019 Olympus became one of the first Japanese companies to hand an activist a board seat, proposing ValueAct partner Robert Hale as a director. ValueAct had more than 5% of Olympus, its first investment in Japan. The pressure to sharpen capital allocation and focus followed.

By 2020, with two ValueAct-aligned directors on the board, Olympus announced it would sell its imaging business, exiting the camera market it had helped create. It pivoted to endoscopes, microscopes and medical equipment. The stock climbed as the company's value became clearer without the loss-making division.

Olympus sold its historic but loss-making imaging division, refocused on medical equipment and sent its shares soaring.

ValueAct wrote down a focus and capital-allocation thesis and secured a board seat.

The camera division was visibly unprofitable and had no defensible future against smartphones.

Getting directors inside let the restructuring agenda move from a letter to a board decision.

Selling the loss-making unit removed a drag and let the market value the medical business on its own.

A shareholder with a board seat can make a company name the unprofitable division it is attached to and let it go.

Olympus became a pure-play medical technology company, and its shares rose strongly as it shed the imaging drag and grew its endoscopy and medical franchises.