Canon Inc. (CAJ) said Monday that it will buy Dutch printer maker Oce NV (OCE.AE) for EUR730 million in cash, sending Oce shares sharply higher, as the Japanese office machine maker aims to grow amid the shaky prospects for corporate spending.

Canon said it will launch a EUR8.6 per share tender offer, which is supported by Oce's management and supervisory board, between January and March next year. The bid means a premium of 70% over Oce's closing share price on Nov. 13, and more than double the average closing price of its shares over the past 12 months.

At 1205 GMT, Oce shares were up 68.5% at EUR8.54, while Canon shares closed down 1.5% in Tokyo.

Canon expects the Oce takeover to help expand its product lineup and sales networks as both partners came under pressure from a prolonged weak corporate spending.

Oce "is a very attractive partner for our marriage," Tsuneji Uchida, Canon's president, said at a press conference. "We can complement each other."

During an Amsterdam press conference, Canon's CFO and executive vice president Toshizo Tanaka said he couldn't quantify the synergies that will be achieved through the integration of Oce.

Canon expects Oce's high-end printing systems to compliment Canon's mid-range products, as well as helping expand sales networks, with Oce strong in Europe and the U.S. while Canon has a solid foothold in Asia.

"Combined skills would give better results," said Anton H. Schaaf, Oce's chief technology and operations officer.

"Canon is paying a decent takeover premium," said Fortis Bank Netherlands Analyst Niels de Zwart, adding he doesn't expect the offer to be topped by rival bidders. De Zwart has a buy rating on Oce's stock.

Oce's business has been under pressure for years and was hurt by the global downturn that affected some of its key markets, such as construction and manufacturing. Oce has been reviewing its strategic options and in April said it didn't rule anything out--a move viewed by analysts as a sign the company gave in to shareholder pressure to seek a buyer.

Bestinver Gestion S.A. SGIIC, a holder of approximately 9.5% of the outstanding shares, as well as Ducatus NV, ASR Nederland NV and ING AM Insurance Companies BV, holders of cumulative preference shares which carry approximately 19% of Oce's voting rights, have all said they'll support the offer.

Some analysts see some potential rival bidders, but wonder if a rival offer will materialize. "Of the strategic options, we would see Hewlett-Packard Co. (HPQ) and Kyocera Corp. (KYO) with sufficient financing options, while Ricoh Co Ltd. (7752.TO) and Konica Minolta (4902.TO) currently have high debt levels and relatively low earnings generation," SNS Securities analyst Maarten Altena said. He rates Oce at hold.

"In fact, we believe Oce is Konica Minolta's single largest reseller, which is why Konica has most to lose from a deal with Canon. The only counter argument here is that Japanese (firms) hardly ever go hostile and the deal with Canon has been approved by Oce management," Royal Bank Of Scotland analyst Wim Gille said in a note to investors. He rates Oce at buy.

One of its most critical shareholders, Hermes Focus Asset Management Europe Ltd., which holds a 4.93% stake according to its most recent regulatory filing, wasn't immediately available to comment on Canon's planned tender offer.

Canon's move to take over Oce should be positive for Canon long-term, said Tetsuya Wadaki, analyst at Nomura Securities. "Since Ricoh purchased Ikon, we've been assuming that Canon would take a strategic action eventually." In August, Ricoh Co. (7752.TO) purchased Ikon Office Solutions, key distributor of copiers and printers for Ricoh rival Canon.

Canon said it expects its net income for 2009 to decline to Y110 billion from Y309 billion a year ago as it sees sales of its office equipment shrinking amid prolonged weak market conditions. Oce, which employees about 22,000 people, generated EUR2.9 billion in revenue in 2008, down from EUR3.1 billion in 2007.

-By Yuzo Yamaguchi and Robin van Daalen, Dow Jones Newswires, +813 6895 7563; yuzo.yamaguchi@dowjones.com

(Ayai Tomisawa and Maaike Noordhuis contributed to this article.)
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