Sony and Olympus announced an agreement that would benefit both parties.  Sony will be investing $645 million in Olympus, which would in turn make them the biggest shareholder in the company.

Olympus currently holds about 70 percent of world’s market for medical endoscopes and Sony’s investment could help them jumpstart their efforts in the medical field which they already entered last year with the acquisition of the American medical diagnostics firm Micronics for an undisclosed sum.

Sony’s president Kazuo Hirai believes that the medical field is lucrative business and they aim to make it as one of their core businesses in the future.

Sony and Olympus will set up a joint company by the end of the year with Sony holding 51 percent and Olympus holding the 49 percent share.  Sony will also be selecting a director that will serve on Olympus’ board.

“By accepting an investment from Sony, we will not only strengthen our financial base, but also combine our strengths and develop the kind of medical devices that we may not have been able to develop on our own,” Olympus president Hiroyuki Sasa said.

Sony’s long-term corporate credit rating was lowered to BBB from BBB+ by the Standard & Poor’s Ratings Services.  Standard & Poor is one of the three central credit rating companies in the United States.  The downgrade was based on the fact that Sony hasn’t recovered from their ailing TV business and they doubt that they would be recovering by 2013.  S&P also stated that the ratings may even go lower if Sony fails to turn things around.

“We base the downgrades on our view that the pace of recovery in earnings of Sony’s mainstay consumer electronics businesses in fiscal 2012 (ending March 31, 2013) will remain slow, and a strong recovery is not likely to occur until at least fiscal 2013,” S&P said in a statement.

Olympus is also not fairing well, especially since a former executive admitted that he and others in the company were involved in hiding losses from investors for 13 years.  Former Olympus executives Chairman Tsuyoshi Kikukawa, Executive Vice President Hisashi Mori and Hideo Yamada, a former auditing officer, all pleaded guilty to accounting fraud and are facing as much as 10 years in jail and 10 million ($128,000) in fines.

The two companies also stated that they are willing to consider working together on digital cameras.  Sony’s investment will hopefully help both parties turn things around.  All they have to do now is to figure out the best way benefit from the partnership.