Japan's Fujifilm Holdings said on Wednesday it is considering supporting scandal-hit endoscope maker Olympus Corp although neither side looks likely to move quickly on an equity alliance that Olympus needs to shore up its finances.

A $1.7 billion accounting fraud has severely depleted Olympus' net assets, but it is being supported by major Japanese shareholders who prefer bringing in an equity partner to selling the whole company or its assets.

Its flexible diagnostic endoscope business, which boasts a 70 percent market share, is seen as a jewel of profitability in Japan's lackluster electronics industry.

We can only say at this stage that we are considering (supporting Olympus), Fujifilm President Shigetaka Komori told Reuters in an interview.

There would be synergies in the endoscope field...It is a given that any company with a medical business would be interested.

Fujifilm, along with Sony Corp and Panasonic, is among firms that media reports and market talk have put into the frame as potential partners for Olympus, although Olympus' president, Shuichi Takayama, said on Wednesday that his company had not been in specific talks with any of those firms.

An equity investment in Olympus by Fujifilm, which holds about 10 to 15 percent of the global diagnostic endoscope market, could trigger a review by Japan's antimonopoly watchdog, the Fair Trade Commission.


Takayama also said Olympus would wait until after a management overhaul in late April to bring in a potential strategic partner.

It is important to improve our equity ratio through measures such as business tie-ups, he told a news conference, noting that the ratio stood at 4.5 percent compared with about 30 percent for its rivals.

The new team will set the direction for specific tie-ups.

Bidders may also be waiting to see what develops in investigations by Japanese police, prosecutors and regulators, as well as by law-enforcement agencies in the United States and Britain.

Takayama, 62, said the current leadership would remain in office for another three months as the company prepared for an extraordinary shareholders meeting in the latter half of April.

That is despite the fact that more than half of its board of directors, including Takayama himself, are being sued by Olympus for mismanagement over the accounting fraud.

Takayama justified his remaining at the helm by emphasizing the need for continuity and his ties to the company's banks, whose support has been key to weathering the scandal as the company tries to rebuild its fortunes.

As president, I have had quite a bit of contact with lenders who have supplied a great deal of our capital, he said. I am in touch with people who are very important and necessary for operating the company from now on.

He reiterated that he and others who were sued will step down at the extraordinary shareholders meeting.

Olympus said on Tuesday that its two outside directors, who were not sued, will choose candidates for the new board and internal auditors.

They will need to decide on the candidates by mid-March, to be ready for a vote for approval to take place at the late-April shareholders' meeting, Takayama said.

Olympus shares have lost half their value since the accounting scandal broke three months ago, when it sacked its British chief executive, Michael Woodford, who blew the whistle over the firm's questionable bookkeeping.

(Additional reporting by Mayumi Negishi and Isabel Reynolds; Editing by Mark Bendeich and Matt Driskill)