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Canon grabs 21.3 percent of Oce shares to secure ownership

Thursday, 19 November 2009
By Print 21 Online Article

Objections to the takeover by UK fund Orbis unlikely to stop the $billion takeover following Canon’s on-market share acquisition.

One day after Canon announced its intention to buy the Dutch-based Océ for $A13.86 per share it went public on the market to snap up 16.9 percent of Océ’s total issued capital at the relative bargain price of $A13.77 per ordinary share. This gives Canon a strategic 21.3 percent of Océ’s total ordinary shares to help its takeover bid.

The move obviously caught the market by surprise and has blunted the objections from UK-based Orbis Fund Management, which holds 10 per cent of the company. Océ shares were trading at around $A8 when Canon made its initial offer, which represented a 70 per cent premium (a 137 per cent premium on the average share price over the past year).

However Orbis claims the bid ‘significantly undervalues’ Océ and the proposed sale is the result of ‘a flawed negotiation process’. It claims it will not sell its stake in Océ to Canon at the price.

The UK fund has a reputation for opposing takeovers to defend its interests, forcing buyers to pay a higher price. It maintains that the Océ board did not seek an offer from potential bidder Konica Minolta. This is disputed by Océ, which claims it spoke with ‘all relevant industry players.’ Konica Minolta has indicated it will not launch a counter bid.

Orbis wants Océ to break up the company and sell its main business units separately to maximise returns for the shareholders. Although the Canon bid is only 1.26 times Océ’s book value, the Dutch company’s balance sheet contains sizeable goodwill.

Canon maintains the announced offer agreed upon with Océ’s supervisory board and management is ‘reasonable’. Its bid is conditional on getting 85 percent of the shares.

At this rate if Orbis can gather some more disgruntled shareholders it may well be able to jack up the price for Océ, but it is unlikely to be able to block the deal.


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