CANON's BID FOR OCE MAY BE IN JEOPARDY ……
CANON's BID FOR OCE MAY BE IN JEOPARDY ……
2010-01-18 at 11:02:22 am #23104CANON’s BID
FOR OCE MAY BE IN JEOPARDY .
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.
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’
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.
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
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.
& 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.
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
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
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.