OCE SHAREHOLDERS OPPOSES CANON TAKEOVER BID
OCE SHAREHOLDERS OPPOSES CANON TAKEOVER BID
2009-11-20 at 11:04:24 am #22967
OCE SHAREHOLDERS OPPOSES CANON TAKEOVER BID !
AMSTERDAM–Orbis Portfolio Management, a large shareholder in Oce NV Wednesday said it will oppose Canon Inc.’s EUR730 million bid to take over Europe’s largest printer maker.In a statement, Orbis said that, “as a result of a flawed negotiation process,” Oce’s assets are “being significantly undervalued” at the proposed buyout price of EUR8.60 a share.
Orbis added that Oce should consider looking for other buyers for each business unit, “yielding a much higher value for shareholders as a result.”Orbis said it has an approximately 10% holding in Oce.For the deal to continue, at least 85% of Oce’s shares need to be tendered to Canon.Orbis also questioned whether Oce’s management has acted in a way that best serves the business units or shareholders. “Not even Konica Minolta Inc (4902.TO), [Oce's] long-term strategic partner, was invited to bid for the company.”However, Konica Minolta has no intentions to launch a counterbid for Oce or take any financial stake in the Dutch firm, a company spokesman told Dow Jones Newswires.”Konica Minolta and Oce currently have operational ties, but no plans to have capital ties”, he said.
Responding to Orbis’ statement, Oce said it has been in frequent contact with “all relevant industry players” and that it has considered and discussed “various transaction forms, all in the best interest of its shareholders and other stakeholders.”Bestinver Gestion SA, a holder of about 9.5% of Oce’s outstanding shares, as well as Ducatus NV, ASR Nederland NV and ING AM Insurance Cos., holders of cumulative preference shares that carry about 19% of Oce’s voting rights, have all said they will support the offer.One of Oce’s most critical shareholders, Hermes Focus Asset Management Europe Ltd., which holds a 4.93% stake according to its most recent regulatory filing, hasn’t yet commented on Canon’s planned tender offer.
Monday, Canon said it will buy Oce for EUR730 million in cash, sending Oce shares sharply higher, as the Japanese office machine maker aims to grow amid the shaky prospects for corporate spending. The Japan-based company currently owns around 21% in Oce.Subsequently, Konica Minolta shares fell due to soured sentiment as a result of Canon’s bid.By 1054 GMT Wednesday, Oce shares were trading 0.3% higher at EUR8.61, slightly outperforming a 0.1% rise in the mid-cap market
Canon bid ‘significantly undervalues’ Océ
Canon’s €730m ($1.1bn) agreed bid for digital printing rival Océ was challenged on Wednesday when a large Océ shareholder said the offer “significantly undervalued” the Dutch company’s shares.Orbis Fund Management – which manages $20bn in funds and has a reputation for seeking out undervalued assets and then mounting a robust defence of its interests – said it would not tender its roughly 10 per cent holding to Canon at the current offer price.“As a result of a flawed negotiation process.?.?.?Océ’s assets are being significantly undervalued at the proposed buy-out price of €8.60 per share,” the fund said.
Canon’s bid is conditional on acceptances for 85 per cent of the shares in Océ, and Dutch law offers substantial protection to minority holders, giving Orbis some power to try and negotiate a higher price.The Japanese company responded by saying that it believed the announced offer that was agreed upon with Océ’s supervisory board and management board “to be reasonable”.Orbis has challenged takeovers in the past. In 2003 it opposed Warren Buffett’s bid for mobile-home maker Clayton Homes and in 2007 it pushed Citigroup to raise its offer for Japanese broker Nikko Cordial.Orbis attacked the management of Océ on Wednesday, saying it had not invited Konica Minolta, a strategic partner of the Dutch company, to make an offer. Océ denied the charge, saying it had spoken to “all relevant industry players” and had considered various transactions before opting for the Canon deal.
Konica Minolta has said it will not make a counterbid.
“Orbis again is questioning whether Océ’s management has acted in a way that best serves the business units or shareholders,” the fund said. It called on Océ to seek separate bids for each of its main business units, arguing that this would produce a higher price for shareholders.Canon wants to buy Océ to expand its product portfolio for high-end digital printers. It is offering a 70 per cent premium to the closing price of Océ’s shares last Friday.Océ made a net loss for ordinary shareholders last year, so the company’s valuation mainly depends on the future earning power of its assets.
Canon’s bid is pitched at 1.26 times Océ’s net book value – a low multiple for the technology industry. But Océ’s balance sheet carries €581m in intangibles such as goodwill, and net tangible assets attributable to ordinary shareholders are only €10m.At its most recent peak in 2007, however, Océ earned €77m in net income for ordinary shareholders. If Océ could achieve that regularly under Canon’s ownership then it would equate to buying the Dutch business at a price-to-earnings multiple of 9.5 times.
Konica Minolta Says It Has No Plan to Counter Oce Bid
Nov.09 — Konica Minolta Holdings Inc., the Japanese lens and office-equipment maker, said it has no plan to counter Canon Inc.’s offer to buy Oce NV for 730 million euros ($1.1 billion).“There’s no plan to make an offer to Oce at the moment,” Minoru Ikehara, a spokesman at the Tokyo-based company, said by phone today. While Konica Minolta had considered an acquisition of the Venlo, Netherlands-based company, it decided to maintain a business alliance instead, he said.
Konica Minolta may make a counter bid, Royal Bank of Scotland Group Plc said in a report yesterday. Konica Minolta, which has a business partnership with Oce, suffers the same lack of scale as Canon, Wim Gille, an analyst for RBS, said in the report.“It’s not realistic that rival companies such as Konica Minolta compete against Canon in a bidding war,” said Hisashi Moriyama, a Tokyo-based analyst at JPMorgan Chase & Co. “Canon has a lot of money relative to rivals.”Konica Minolta fell 5.3 percent to close at 836 yen on the Tokyo Stock Exchange, the biggest drop since Aug. 7. Canon, the world’s largest maker of office equipment, rose 3 percent to 3,470 yen, while Japan’s benchmark Nikkei 225 Stock Average slid 0.6 percent.