M&A

18 November, 2009

UPDATE 1-Orbis opposes Canon's $1.1 bln bid for Oce

* Orbis: bid "significantly" underprices Oce

* Says won't sell 10 pct stake at current offer price (Adds bid details, background)

TOKYO, Nov 18 (Reuters) - Orbis Portfolio Management said on Wednesday it would not tender its shares in Dutch copier and printer maker Oce (OCEN.AS) to Canon Inc (7751.T), saying the 730 million euro ($1.1 billion) bid was "significantly" underpricing the company.

The Japanese camera and office equipment maker offered on Monday to pay 8.6 euros for each Oce share, a 70 percent premium to the previous trading day's close, in a move to strengthen its product line-up and sales channels. [ID:nLG315826]

"As a result of a flawed negotiation process ... Oce's assets are being significantly undervalued at the proposed buyout price," Orbis Portfolio Management (Europe), a manager and adviser to Orbis Funds, said in a statement distributed by its public relations agent FD.

"Orbis Funds would not wish to tender their approximate 10 percent holding at the current offer price."

Most analysts said on Monday that the bid price was good for Oce shareholders, though some did not rule out a rival offer, possibly from Hewlett-Packard (HPQ.N), Kyocera (6971.T), Xerox, Toshiba Corp (6502.T) or Konica Minolta (4902.T), which has a cross-selling agreement with Oce.

Including debt and other obligations, the deal values Oce at about 1.5 billion euros ($2.2 billion), OCE Chief Executive Rokus van Iperen said on the day of the bid.

Canon's offer for Orbis comes a little over a year after Japanese rival Ricoh (7752.T), the world's largest copier maker, bought U.S. office equipment distributor Ikon Office Solutions, dealing a blow to Canon, which provided 60 percent of the products Ikon handled. [ID:nT119530]

Canon, which derived 65 percent of its 2008 sales from printers and copiers, and Oce and other rivals have suffered from the economic slump, which has forced companies to cut office costs.

Oce, loss-making in the past two quarters, has been cutting costs and staff and paid no final dividend in 2008. Canon and Ricoh reported sharp falls in quarterly profit last month. [ID:nLC542401] [ID:nT203059] (Reporting by Kiyoshi Takenaka; Editing by Joseph Radford)

Source: http://www.reuters.com