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BIG BUSINESS:

Canon to buy Océ

Cnon Group Logo

Canon and Océ announced today (November 16th, 2009) in Tokyo that they have reached a conditional agreement to combine their wide format printing activities through a fully self-funded, public cash offer by Canon for all the shares of Océ.

Canon will buy Océ for US $1.1bn.

Océ Company Logo

Scanners4CAD knew that Canon was doing well, taking market share from HP, but had no idea that it was in any position to buy Océ, Europe's only large format printer manufacturer. As reported recently in Scanners4CAD, Océ has been cutting costs in order to keep its head above water in the current economic climate.

Oce fly the flag
Océ sail on under a new flag!

What does this meam for large format scanning and MFPs?

This development may have some impact on the large format scanning market. Canon is a hugely popular supplier of large format printers for MFP (multi-function peripheral) systems that combine wide format scanners and printers into one combined, easily accessed, space-saving workstation.

Océ badge Contex SD and HD large format scanners while Colortrac enjoys favor at present with Canon Europe, Canon USA and many Canon distributors as a preferred supplier of wide format scanners when they need to source a wide format scanning device for sale as an MFP with a Canon wide format printer.

Will both Contex and Colortrac continue to supply wide format scanners to the new conglomeration? Presumably one will have to go. Possibly both! Océ's long history with Contex indicates that this is probably not good news for Colortrac. On the other hand, Colortrac is resilient, innovative and enjoying success as its products win accolades, new users and an impressive if unspoken endorsement from Xerox's decision to OEM the SmartLF Ci 40. Putting the nail in the coffin for both Contex and Canon is the fact that Océ is now widely believed to be building its own scanners (or acquiring them from an unknown source).

HP, the current No. 1 in wide format printing, now faces its greatest challenge in the large format printing market where it was previously guesstimated to have a 70% market share compared to Canon. Together, Canon and Océ now have 40% or more compared to HP's 60% or less. Note below that Canon still talk of "becoming No. 1", that there is some acceptance that they with Océ are not there yet.

Like Océ, HP also OEMs large format scanners from Contex. For this slender reason, Canon may not want Océ to continue to source wide format scanners from the same source as its major rival. The alternatives are Graphtec who may OEM its wide format scanners exclusively to KIP and Image Access, whose expensive devices are sold exclusively in the USA by Kodak. This leaves Colortrac!

Some facts about Canon

Up to the end of 2008, the number of companies consolidated within Canon was 245. Océ will be acquired during Canon's Excellent Global Corporation Plan Phase III.

In the Financial Year ended 2009 Canon had Nett Sales of US $4.49bn. Business machines accounted for 65% of sales. Of this figure, office imaging products (copiers and MFPs) made up 29% and computer peripherals (inkjet and LBP laser printers) made up 34%. Cameras account for 26% of Nett Sales.

Europe, (including the Middle East and Africa) is Canon's biggest (33%) market with US $l.474bn turnover while employing 12,735 people. The US market is similar (28%) with $1.27bn in turnover from 11,122 employees. When Asia and Oceania is combined with Japan, it provides $1.7bn (39%) but whilst employing some 143,000 people, the majority in manufacturing.

In terms of patents received in the last 10 years (1999-2008), Canon have been granted 19,564 compared to HP's 14,130. By far the most successful recipent of patents was IBM with 32,946.

What the Bosses say

According to a joint press release, "Canon and Océ aim to create the overall No. 1 presence in the printing industry, building on an enhanced scale and a combined history of innovation and excellent client servicing. The combination will capitalize on an excellent complementary fit in product mix, channel mix, R&D, and business lines resulting in an outstanding client offer spanning the entire printing industry."

Canon's President, Tsuneji Uchida, said "We are delighted to welcome Océ, the ideal partner in every respect, into the Canon Group. Through the merger of Canon and Océ, we believe that we will be able to realize 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."

Océ's CEO Rokus van Iperen said "I am very much looking forward to joining forces with Canon. There is a great fit between our companies, which share similar values and a strong commitment to technology and innovation. I am proud Canon intends to team up with Océ, based upon the prominence of our customers and technology and of course our people that have shaped our company for generations. This is the best possible combination in the consolidating global printing industry and will deliver scale in R&D, manufacturing and distribution. The combined organization 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."

Canon's offer price of € 8.60 per share of Océ represents a premium of 70% over the closing share price of Friday 13th, November 2009 and 137% to the average closing price of Océ's shares over the last 12 months. The offer values 100% of the issued and outstanding shares of Océ at approximately € 730 million.

In 2008 Océ achieved revenues of € 2.9 billion. The publicly listed holding company of the Group is Océ N.V. The issued share capital amounts to around € 53.7 million, divided into € 43.7 million ordinary shares and € 10 million financing preference shares with a nominal value of € 0.50 each. The ordinary shares of Océ are listed on the stock exchange in Amsterdam (NYSE Euronext).

For more information on Océ see: www.global.oce.com.