Saturday, December 19, 2009

Could HP or Konica Outbid Canon in its Pursuit of Oce?

Some of Oce’s shareholders think the firm should be valued at between EUR 10.50 to EUR 11 per share. They claim that Océ is a high-end business, it was argued, and could be highly profitable with the skills and technology Canon would provide. Buying the Dutch business would offer Canon opportunities to drive down cost and reap enormous commercial synergies. However, at around 5.3x sales, Canon’s bid was said to be on a similar level to the acquisition of bankrupt US office equipment and support company Danka Business Systems by Konica Minolta in 2008.

I could anticipated a possible repeat of the scenario encountered by Cisco Systems in its pursuit of Norwegian group Tandberg could arise, where opposition from shareholders forced the Californian tech giant to raise its offer by 10%.
In my opinion however, Océ’s options appear limited outside of Canon. A recent product alliance between Canon andHewlett Packard  rules the latter out of a rival bid.  Similarly, the prospect of Konica Minolta interloping can also be discounted after it signed a product development agreement with Océ in 2008. As part of the contract Océ and Konica agreed not to take any shareholdings in each other for five years.

Shares in Océ were up 0.24% at EUR 8.43 on Friday afternoon, valuing the company at EUR 736m.

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