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 user 2010-01-18 at 11:01:13 am Views: 38
  • #23274

    Canon Inc.’s $1.1 billion bid for Oce NV may be in jeopardy after holders of 13 percent of the Dutch company said they won’t tender their shares and a group representing about 200 investors said the offer was too low.Hermes Focus Asset Management Ltd., with 3.3 percent, said on Jan. 11 it won’t tender its shares, calling the Canon offer “meager.” Orbis Funds, with about 10 percent of Oce, in November rejected Canon’s bid. Investor group VEB, which represented 211 shareholders with about 0.003 percent of Oce at its last shareholders meeting, judged the bid too low.

    Tokyo-based Canon, the world’s largest camera maker, may have to raise its offer or lower its minimum threshold to below 85 percent of Oce’s outstanding shares to see the deal through should more investors oppose it. With the takeover, Canon is seeking to expand its printer operations and widen its lead in the global market for office equipment.“If Canon’s determination for completion of the transaction is strong, it’s possible the company will add some premium after discussing with Oce’s investors,” said Hisashi Moriyama, a Tokyo-based analyst at JPMorgan Chase & Co. “On the other hand, Canon could drop the plan, if the company judges adding premiums isn’t merited.”Canon in November agreed to buy Oce, the world’s largest maker of wide-format printers, for about 730 million euros ($1.1 billion) in cash. The company said Nov. 16 it would pay 8.60 euros a share, or 70 percent higher than Venlo, Netherlands- based Oce’s last closing price.

    ‘Not in a Hurry’
    “We believe we are offering an adequate price,” Ichisei Hanada, a spokesman for Canon, said yesterday. “There’s no change to our plan to start the offer by March 31,” he said. Canon hasn’t received letters from investors similar to those from Hermes and Orbis, he said.
    Oce, which yesterday reported a fourth-quarter net loss of 23 million euros, fell 0.02 percent in Amsterdam yesterday to 8.59 euros, close to the Canon offer price.“Looking at the share price, investors are not anticipating the bid will be raised,” said Niels de Zwart, an Amsterdam-based analyst at Fortis Bank Nederland. “The market seems to think: This bid will go ahead at 8.60 euros, no matter what these shareholders are saying.”Since Canon has indicated that it will largely let Oce operate on a stand-alone basis in the first three years, it “may not be in a hurry to get 100 percent of the shares,” said De Zwart, who has a “sell” rating on Oce.He said it is unlikely Canon will withdraw its bid entirely. “Canon aims to become the number 1 in printing and to get there, they need Oce.”

    Canon Supporters
    The deal would be Canon’s biggest purchase, giving it control of the world’s largest maker of machines that make blueprints and advertising posters. Ricoh Co., Japan’s second- biggest maker of office equipment, in 2008 agreed to buy Malvern, Pennsylvania-based Ikon Office Solutions Inc.Canon’s offer was 1.2 times Oce’s projected book value per share for the year ending November, according to the average of six analyst estimates. That was in line with projected multiples at office equipment makers such as Xerox Corp. and Brother Industries Ltd.

    Ducatus NV, ASR Nederland NV and ING Groep NV, which hold about 19 percent of Oce’s share capital, have agreed to sell their stakes to Canon, Oce said Nov. 16. Bestinver Gestion SA, holder of about 9.5 percent of the outstanding stock, provided an irrevocable undertaking to tender. Canon said on Dec. 1 that it held 25.3 percent of Oce’s ordinary shares.

    Pictet & Cie, Sparinvest funds and Stichting Pensioenfonds ABP, which own about 5 percent each of Oce, according to Bloomberg data, declined to comment on whether they plan to tender their shares.The Dutch shareholder association VEB said the price doesn’t fully reflect the savings that can be expected when Oce operates within a stronger group.“Oce was negotiating from a position of weakness,” David Tomic, a spokesman for VEB, said in a telephone interview yesterday. “That makes it unlikely that a good price was offered.”Orbis Funds, the Bermuda-based manager of $20 billion in assets that challenged Warren Buffett’s bid for Clayton Homes Inc. in 2003 and led investors in pressuring Citigroup Inc. to raise its offer for Nikko Cordial Corp., in November rejected Canon’s bid. The fund said Canon’s offer “significantly undervalues” Oce’s assets.

    No Counterbid
    Hermes this week said Canon’s indicative bid was “a meager representation of the true value of Oce, when profitability potential and the depressed share price are put into a proper perspective.”“Following integration with Canon, and with profitability in line with industry standards, the company’s equity would indicatively be worth some 75 percent more than the offer price,” Hermes said.

    Oce’s management said it still supports the takeover.
    Fortis’s De Zwart said it’s unlikely there will be a counter offer for Oce.“A bidding war is unlikely as other potential buyers already indicated they are not interested,” he said. Konica Minolta Holdings Inc., the Japanese lens and office-equipment maker, on Nov. 17 said it had no plan to counter Canon’s offer.

    Océ anticipates challenging year after posting £20.7m Q4 loss
    Océ chairman Rokus van Iperen has anticipated the digital printer sales
    market “will remain challenging” in 2010 following a fourth quarter of
    continued revenue decline.The Dutch digital press manufacturer made a net loss of $23m (£20.7m)
    for the quarter, compared to a €1m profit in the previous year. Total
    revenues during the quarter amounted to €683m, equivalent to a 15%
    decrease in the same period in 2008.However, the manufacturer’s share of digital colour press sales in its
    revenues increased to 34% from 28% during the quarter.Yet its Wide-Format Printing Services division experienced a decline
    related to the deterioration in the construction and manufacturing
    market sectors, with revenues coming in at €187m, a decline of 17%.Van Iperen said: “Our revenues continued to decline in the fourth
    quarter as customers remained uncertain about the economic situation and
    sustained their efforts to reduce costs.”In 2010, we anticipate that the markets will remain challenging. In
    order to further strengthen our competitive position and drive sales
    under difficult market conditions, we will continue to introduce
    innovative products. At the end of 2009, Océ’s proposed acquisition by Canon moved a step
    closer after the Japanese company won approval from European Union
    competition regulators.

    The Japanese manufacturer has made a €730m (£655m) cash offer for Océ
    with a view to creating “the number one presence” in the digital market.Concerning the year ahead, Océ stated that it would remain focused on
    cost-cutting and balance sheet reduction programmes while working with
    Canon “to create the best combination in the printing industry”.Oce’s shares continued to trade at Canon’s offer price of €8.60 a share
    this morning, indicating that the market is anticipating a successful
    resolution to the deal.