By Harro ten Wolde
AMSTERDAM, Nov 20 (Reuters) - Japan's Canon plans to buy Dutch copier and printer maker Oce for 730 million euros ($1.09 billion), but large Oce shareholder Orbis said the offer undervalued the company.
In response, Oce shares passed Canon's 70 percent premium,
8.60 euros-per
share offer and traded as high as 8.85 euros on Thursday, sparking investor hopes for a higher bid.
What could be next?
CANON RAISES OFFER
The Orbis move could threaten the coalition Canon has created supporting its offer. Canon has already taken a 21.3 percent stake through purchases on the open market. With that factored in, Canon has 49.8 percent of shares committed to the offer, although that support is not unconditional.
For instance, Bestinver Gestion S.A. has agreed to tender its 9.5 percent stake as long as a counterbid is not 10 percent or more above Canon's offer.
Preference shareholders Ducatus/Kempen Capital Management, ASR and ING, which together hold 19 percent of Oce's voting rights, agreed to sell their interests to Canon when the offer is declared unconditional.
Given that Canon has a 85 percent minimal required acceptance of the shares, and Orbis says it has a 10 percent stake, shareholders representing only just over 5 percent of Oce would have to join with Orbis to make Canon's bid fail.
Canon is now considered highly likely to raise the offer to keep Orbis on board and prevent a domino-effect. 'Chances that the Canon offer may fail have slightly increased,' analyst Jos Versteeg at Amsterdam broker Theodoor Gilissen said.
RIVAL BIDDER
Shareholder opposition -- on Monday Dutch shareholders group VEB said it did not expect all shareholders to 'jump for joy' at the offer -- is considered likely to increase the chances of another bidder entering the arena.
Canon's offer values Oce at 5.4 times earnings before interest, taxes, depreciation and amortisation (EBITDA). This compares to an average of 7.5 times EBITDA for the peer group, analysts at SNS Securities calculated.
Konica Minolta, which has a cross-selling agreement with Oce, said it was not interested in entering a bidding war and Xerox has recently made a major acquisition in the U.S.. That leaves Ricoh and Hewlett-Packard as the main potential counterbidders left.
Analysts consider Oce's Wide Format Printing Systems (WFPS) division would perfectly fit within Hewlett-Packard.
NO BIDDER APPEARS; CANON STICKS TO ITS GUNS
Canon's strong net cash position of 5 billion euros could well deter potential counterbidders from entering the arena.
Ricoh, the world's largest copier maker, may still be occupied with integrating U.S. office equipment distributor Ikon Office Solutions, which it bought, and shy away from counterbidding for Oce.
This could mean Canon will stick to its guns. Orbis alone can't block the bid. If all other shareholders tender their shares Orbis will be left with a 10 percent stake in an empty shell.
CANON WALKS AWAY
The prospect of Canon walking away from the deal is seen unlikely becuase Oce is too important for Canon in its challenge to keep up with rivals Ricoh and Xerox.
Ricoh's acquisition last year of Ikon dealt a big blow to Canon which provided 60 percent of the products Ikon handled.
Canon and Oce products have little overlap, with the Japanese company strong in regular office machines and mid- to lower-end production printers while Oce excels in high-end and advertisement-use large-sized printers.
One way or another, though, most analysts agree that Oce will end up being sold to someone in the near future.
'Investors realise that chances of survival are small for Oce on its own,' asset manager Corne Van Zeijl at SNS Management said.
For a FACTBOX on Oce, click:.
($1=.6722 Euro)
(Editing by Joel Dimmock) (harro.tenwolde@reuters.com; Reuters Messaging: harro.tenwolde.reuters.com@reuters.net; +31 20 504 5017) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
AMSTERDAM, Nov 20 (Reuters) - Japan's Canon plans to buy Dutch copier and printer maker Oce for 730 million euros ($1.09 billion), but large Oce shareholder Orbis said the offer undervalued the company.
In response, Oce shares passed Canon's 70 percent premium,
8.60 euros-per
share offer and traded as high as 8.85 euros on Thursday, sparking investor hopes for a higher bid.
What could be next?
CANON RAISES OFFER
The Orbis move could threaten the coalition Canon has created supporting its offer. Canon has already taken a 21.3 percent stake through purchases on the open market. With that factored in, Canon has 49.8 percent of shares committed to the offer, although that support is not unconditional.
For instance, Bestinver Gestion S.A. has agreed to tender its 9.5 percent stake as long as a counterbid is not 10 percent or more above Canon's offer.
Preference shareholders Ducatus/Kempen Capital Management, ASR and ING, which together hold 19 percent of Oce's voting rights, agreed to sell their interests to Canon when the offer is declared unconditional.
Given that Canon has a 85 percent minimal required acceptance of the shares, and Orbis says it has a 10 percent stake, shareholders representing only just over 5 percent of Oce would have to join with Orbis to make Canon's bid fail.
Canon is now considered highly likely to raise the offer to keep Orbis on board and prevent a domino-effect. 'Chances that the Canon offer may fail have slightly increased,' analyst Jos Versteeg at Amsterdam broker Theodoor Gilissen said.
RIVAL BIDDER
Shareholder opposition -- on Monday Dutch shareholders group VEB said it did not expect all shareholders to 'jump for joy' at the offer -- is considered likely to increase the chances of another bidder entering the arena.
Canon's offer values Oce at 5.4 times earnings before interest, taxes, depreciation and amortisation (EBITDA). This compares to an average of 7.5 times EBITDA for the peer group, analysts at SNS Securities calculated.
Konica Minolta, which has a cross-selling agreement with Oce, said it was not interested in entering a bidding war and Xerox has recently made a major acquisition in the U.S.. That leaves Ricoh and Hewlett-Packard as the main potential counterbidders left.
Analysts consider Oce's Wide Format Printing Systems (WFPS) division would perfectly fit within Hewlett-Packard.
NO BIDDER APPEARS; CANON STICKS TO ITS GUNS
Canon's strong net cash position of 5 billion euros could well deter potential counterbidders from entering the arena.
Ricoh, the world's largest copier maker, may still be occupied with integrating U.S. office equipment distributor Ikon Office Solutions, which it bought, and shy away from counterbidding for Oce.
This could mean Canon will stick to its guns. Orbis alone can't block the bid. If all other shareholders tender their shares Orbis will be left with a 10 percent stake in an empty shell.
CANON WALKS AWAY
The prospect of Canon walking away from the deal is seen unlikely becuase Oce is too important for Canon in its challenge to keep up with rivals Ricoh and Xerox.
Ricoh's acquisition last year of Ikon dealt a big blow to Canon which provided 60 percent of the products Ikon handled.
Canon and Oce products have little overlap, with the Japanese company strong in regular office machines and mid- to lower-end production printers while Oce excels in high-end and advertisement-use large-sized printers.
One way or another, though, most analysts agree that Oce will end up being sold to someone in the near future.
'Investors realise that chances of survival are small for Oce on its own,' asset manager Corne Van Zeijl at SNS Management said.
For a FACTBOX on Oce, click:.
($1=.6722 Euro)
(Editing by Joel Dimmock) (harro.tenwolde@reuters.com; Reuters Messaging: harro.tenwolde.reuters.com@reuters.net; +31 20 504 5017) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
