Konica Minolta is to quit the photography business, a market it has been involved in for over 100 years, resulting in the loss of around 3,700 jobs worldwide.
As part of the deal Sony will take over Konica Minolta's digital SLR business for an undisclosed sum.
The company is also shutting down its photographic film and colour paper business in light of the huge popularity of digital cameras. The film business is shrinking at around 20 per cent a year, according to some analysts.
"In today's era of digital cameras it became difficult to provide competitive products even with our top optical, mechanical and electronics technologies," Konica Minolta told the BBC.
"For colour film and colour paper, while considering our customer needs, we will reduce product line-up step-by-step and cease our film production and colour paper by March 2007."
The company has said that it will now concentrate on its colour photocopier and medical supplies businesses.
Konica Minolta was formed from the merger of the two companies in 2003. The firm warned in November that it was expecting a full-year net loss of £232.5m.
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