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Japanese tech giant Canon has today announced it is to acquire European print company Océ in a move aimed at creating a leader in the global printing industry.

Under the terms of the deal, Canon plans to make Océ a `consolidated subsidiary`. Océ’s management and board fully support Canon’s offer, a joint statement said today.

Canon will offer €8.60 in cash for each Océ share.

Common goal

The two firms said that by working together they aim to achieve “No 1 positions worldwide across the entire printing industry”.

“Through the merger of Canon and Océ, we believe that we will be able to realise clear benefits, not only in the area of R&D, but also in terms of product mix and marketing and are confident that this winning combination will contribute greatly to our goal of becoming the overall No 1 presence in the printing industry,” said Canon’s president and COO Tsuneji Uchida.

“This is the best possible combination in the consolidating global printing industry and will deliver scale in R&D, manufacturing and distribution,” said Océ’s CEO Rokus van Iperen.

“The combined organisation provides us with access to a huge sales network in Asia as well as mutual cross-selling opportunities in Europe and the United States. Our customers will benefit from an outstanding product and services offering and our employees will be offered appealing development opportunities,” he added.

Time frame

The integration of both Canon and Océ businesses will take place over the coming three years.

Océ and Canon said they do not expect any Océ job cuts resulting from the deal, excluding already announced personnel reductions.

Océ, headquartered in the Netherlands, develops, produces, and markets document and industrial-use printing systems as well as high-speed wide-format digital print systems.

It operates in numerous regions and countries, such as Germany, the UK, France and the Netherlands, while generating about 40pc of its revenue in the US.

The acquisition would be one of the largest to date by a Japanese company in continental Europe amid signs of a gradual recovery in M&A. Tsuneji Uchida, Canon’s president, said the agreed deal would “contribute greatly to our goal of becoming the overall number one presence in the printing industry”.

Professional printing is one of the main areas that the Japanese group – best known for cameras and photocopiers – is targeting for its future growth.

Mr Uchida said: “The printing industry is going through a huge change. People are increasingly outsourcing printing and document management. We see growth in areas of production printing.”

Canon’s recommended cash offer of €8.60 per Océ ordinary share is a 70 per cent premium to Océ’s closing price on Friday and a 137 per cent premium to the average share price over the last 12 months. However, the Dutch group has seen its share price erode over the past two years, hitting a low just below €5 this year from a range in the double digits until 2007 and a high of €40 in 1998.

Océ’s largest business is digital printers for jobs such as bank statements, marketing direct mail and print shops.

Canon is offering €730m for the ordinary shares, €65m for preference shares that control 19 per cent of Océ’s votes, and will assume net debt of €528m, giving the deal a total enterprise value of €1.32bn.

That equates to 5.6 times Océ’s €234.7m earnings before interest, tax, depreciation and amortisation last year. Canon is offering 1.26 times Océ’s net book value of €591m at the end of August although €581m of that is intangible assets such as goodwill.

Last year, Océ made a net loss attributable to ordinary shareholders of €585,000 on sales of €2.9bn as a result of the downturn and losses on the disposal of operations.

Canon made a net profit of Y309bn ($3.5bn) last year on sales of Y4,094bn. It had Y623bn of net cash at the end of September and said it would finance the offer from its own resources. It said there would be no job losses as a result of the deal as there was little overlap between the two companies.

Canon was advised by Mizuho Securities. ING advised Océ and Lazard advised Océ’s supervisory board.