Japan's Olympus Corp Thursday stuck to its defense of deals that have come under fire since the 92-year-old firm axed its British CEO in a bitter boardroom battle, repeating that the acquisitions were strategic and involved no wrongdoing.
Olympus Chairman Tsuyoshi Kikukawa resigned a day earlier in a bid to restore confidence in the endoscope and camera maker, shaken by the public standoff with its ex-CEO over a hefty advisory fee for one acquisition and over other past deals.
Olympus shares earlier surged in brisk trade Thursday morning after Kikukawa's resignation and a pledge by his successor to explain the past M&A deals at the heart of a scandal that has wiped out half of the firm's market value.
But it remains unclear how the stock will fare after Olympus reiterated that it was not aware of any illegalities or fraudulent actions regarding its purchase of medical equipment maker Gyrus.
Olympus paid $2.2 billion for the firm in 2008 and handed a record $686 million in advisory fees to two obscure firms, New York-based AXES America LLC and Cayman Island-based AXAM Investment Ltd.
This acquisition ... has made a big contribution to expanding our core business to date, Olympus said in a statement, adding it did not think the advisory fee was excessive.
New President Shuichi Takayama also defended Olympus's purchase of three domestic firms -- a maker of microwaveable cookware, a medical waste recycler and an online cosmetic firm.
It was our strategy to find new growth areas to reduce our overreliance on the endoscope business. These three acquisitions were part of that strategy, he told a news conference.
The company fired its British President and Chief Executive Michael Woodford on Oct. 14, just two weeks after his appointment as CEO, saying he failed to understand the company's management style and Japanese culture. Kikukawa then took over Woodford's role.
Woodford says he was sacked for questioning the massive advisory fee for the Gyrus purchase as well as the three other deals, and for urging Kikukawa to step down.
Olympus shares were up 13 percent at 1,242 yen on Thursday. It was the most heavily traded stock by turnover.
Pressure has been mounting on the camera and endoscope maker to disclose more information on its takeover of medical equipment maker Gyrus in 2008 and on other deals.
Japan's Securities and Exchange Surveillance Commission has been looking into the company since August, sources familiar with the matter told Reuters.
A senior ruling party lawmaker has also called for probes by Japan's financial and securities watchdogs and urged Olympus to explain the fees, which could undermine shareholder confidence in Japanese corporate governance.
The Olympus scandal could re-ignite debate over what critics say is a deep-seated weakness of Japanese management -- a lack of strong independent oversight of boards, which gives shareholders' rights short shrift.
Takayama, 61, joined Olympus straight from an engineering high school in 1970 and has served on the company's board since 2006 after holding several senior managerial positions.
Ex-CEO Woodford has said he was now talking to the U.S. Federal Bureau of Investigation and Britain's Serious Fraud Office.
(Additional reporting by Taiga Uranaka and Lisa Twaronite; Writing by Tomasz Janowski and Linda Sieg; Editing by Edmund Klamann and Edwina Gibbs)