Sony invests $645 million into ailing Olympus

Sony has decided to help out Olympus.

The Japan-based companies announced today that Sony will acquire over 34 million shares in Olympus through a third-party allotment to the tune of $645 million in cash. The deal, which both sides are calling a "capital alliance," is designed to help keep Olympus afloat following a scandal that has brought the company to its knees.

To consumers, Olympus is best known for its cameras. But the company also produces optical equipment for medical, scientific, and industrial uses.

Olympus' troubles started -- on paper, at least -- last year when its dismissed CEO Michael Woodford presented documents to the media alleging that the company had used odd accounting practices, payouts, and other financial dealings designed to cover up losses for more than a decade. When the dust finally settled, the alleged fraud was at the time valued at about $1.7 billion.

Since then, a host of issues have arisen, including the arrest earlier this year of former Chairman Tsuyoshi Kikukawa for alleged connection with the scandal. Investors, meanwhile, have sold off shares over fears about Olympus' financial standing. In June, Olympus announced that it would lay off 2,700 employees, or 7 percent of its workforce.

Aside from investing cash in Olympus, Sony will partner with the company on a host of medical devices, including endoscopes. The joint venture will be established later this year, with Sony holding 51 percent ownership. The companies will also team up on digital camera components.