OCE SHAREHOLDERS OPPOSES CANON TAKEOVER BID

[Anonymous]

http://online.wsj.com/article/BT-CO-20091118-704283.html
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

http://www.ft.com/cms/s/0/9e520efc-d413-11de-990c-00144feabdc0.html
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.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aK7l7Pm9wNyU
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.

[Author]

November 20, 2009 at 11:06 AM