Océ books losses for 2009, prepares for take-over by Canon

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Digital printing systems manufacturer Océ booked a net loss of EUR 23 million in the fourth quarter of 2009, compared to a small profit of EUR 1 million for the same period 2008. Sales were down 15 per cent to EUR 683 million. The total loss booked for the year 2009 is EUR 47 million. However, cash flow improved from EUR 19 million last year to EUR 82 million by the end of 2009.

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• Océ, HQ, Velno, Netherlands

In November last year, Japanese tech giant Canon made a bid of EUR 730 million for Océ, but two shareholders who own a combined 13 per cent of the shares (Orbis Portfolio Management and Hermes Focus Asset Management) refused to tender their stakes. In a statement this month, Océ CEO Rokus van Iperen said the company still backs the bid because it is in the interests of its shareholders and other stakeholders: “the transaction process is on track and all relevant anti-trust approvals have been obtained,” he explained. Océ and Canon said they do not expect any Océ job cuts resulting from the deal, excluding already announced personnel reductions. The integration of the two businesses is to take place over the coming three years.

Commenting on the company’s performance in 2009, van Iperen said: “Our revenues continued to decline in the fourth quarter as customers remained uncertain about the economic situation and sustained their efforts to reduce costs. Towards the end of the year, we saw some bottoming out in the sales of continuous feed systems in the United States. We are on track with the implementation of our action program related to job reductions and saving out-of-pocket expenses. Although we have spent a significant amount on restructuring, we improved our cash flow by further reducing inventories and trade receivables. Our net debt developed positively for the third consecutive quarter. In 2010, we anticipate that the markets will remain challenging.”

Océ is a manufacturer of office printing and copying systems, high speed digital production printers and wide format printing systems for both technical documentation and color display graphics. Océ is also a foremost supplier of document management outsourcing. Many of the world’s Fortune 500 companies and leading commercial printers are Océ customers. The company was founded in 1877. With headquarters in Venlo, The Netherlands, Océ is active in over 90 countries and employs some 23,000 people worldwide. Océ generated revenues of EUR 2.9 billion in 2008, and EUR 2.65 billion in 2009, about 40% of which in the USA.

Canon offered EUR 730 million for Océ’s ordinary shares (or EUR 8.60 per share), EUR 65 million for preference shares that control 19 per cent of Océ’s votes, and is ready to assume net debt of EUR 528m, giving the deal a total enterprise value of EUR 1.32 billion or roughly twice Océ’s net book value of EUR 600 million as per December 2009. Canon made a net profit of JPY 309 billion (EUR 2.3 billion) last year on sales of JPY 4,094 billion (EUR 31 billion). It had JPY 625 billion (EUR 4.7 billion) of net cash by the end of 2009 and said it would finance the offer from its own resources. The acquisition will be one of the largest to date by a Japanese company in continental Europe.

Canon's offer comes a little over a year after competitor Ricoh, the world's largest copier maker, bought US office equipment distributor Ikon Office Solutions, dealing a blow to Canon which provided 60 per cent of the products Ikon handled. According to most industry analysts, Canon’s offer is good for Océ and its shareholders, even when some initially didn’t rule out a rival offer from Konica Minolta, which until recently had a cross-selling agreement with Océ, or other competitors such as HP, Kyocera, Xerox or Toshiba. For Océ’s CEO Rokus van Iperen, “this is the best possible combination in the consolidating global printing industry and will deliver scale in R&D, manufacturing and distribution. 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.”

As to Canon’s President and COO Tsuneji Uchida, “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 we are confident that this winning combination will contribute greatly to our goal of becoming the overall Number One presence in the printing industry.” And he added: “Our industry is going through a huge change. People are increasingly outsourcing printing and document management. We see growth in areas of production printing.”

In view of the takeover by Canon, Océ announced meanwhile that it had reviewed its strategic alliance with Konica Minolta. The joint development activities for cutsheet monochrome and color output systems for the production market have been stopped.
In mutual consultation, both companies reached a new OEM sales agreement under which Konica Minolta will continue to supply its office printing systems to Océ, and both Konica Minolta and Océ will continue to supply cutsheet production printing systems to each other. Also, both companies will continue to supply consumables and parts and offer after-sales services for products sold under their former and new OEM sales agreement to serve their customers.

Update
Orbis Portfolio Management Europe announced on 23, February that it would not tender its 10% holding in Océ to Canon. Orbis called the deal price inadequate. This was following reports on 22, February that Océ NV shareholders Hermes Fund Managers and The Universities Superannuation Scheme asked a Dutch court for measures to safeguard minority shareholders after Canon takeover bid is declared unconditional. Hermes and the UK pension fund, holding about 5.1 percent of Océ’s shares, asked the court to consider the “deteriorated position of minority shareholders following the recently changed corporate governance of Océ, which will take effect once Canon declares its offer unconditional,” and asked for measures to restore their position, they said in a statement. Hermes now has 3.3% of Océ shares down from 10% (November 30, 2008, end of the financial year). The UK pension Fund , USS owns 1.8% of Océ. Danish fund Sparinvest, which owns 5.5 % of Océ's shares, has said the offer did not "reflect the full value" of Océ.

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• Arizona 550 GT

New high capacity UV flatbed printer from Océ
8 Feb 2010, Océ launched the Arizona 550 GT flatbed printer, capable of point of purchase (POP)-quality prints at 433 square feet or thirteen 4 x 8 feet boards per hour and offers much better value than other UV flatbed models currently available in the market.

With nearly 2,000 platform shipments to date, Océ’s Arizona Series is the market leading UV flatbed press series. The Arizona 550 GT is printing twice as fast as other Arizona models, using UV curable inks and Oce VariaDot imaging technology to deliver near-photographic image quality for nearly any application. Designed as a flatbed system, it can print on a wide variety of rigid substrates up to 49.2 by 98.4 inches in area and up to two inches thick. It also offers a Roll Media Option for printing onto flexible media up to 86.6 inches wide.

The printer’s production speed enables users to print more than 100 four by eight feet boards in a single eight-hour shift. With this productivity, print providers can confidently take on peak demand and rush jobs. An Express print mode will also be available with print speeds of up to 721 square feet per hour, or 22 four by eight feet boards per hour, nearly three times higher than the fastest print speed available on the previously-released Arizona 350 GT printer.Priced just under EUR 200,000, the Dutch manufacturer claims the 550 GT to be between 30 and 40 percent cheaper than comparable UV flatbed systems in the market.

The Arizona 550 GT can print on irregularly shaped or non-square items, heavy substrates such as glass, or materials that have an uneven surface such as wood. This is an important advantage over competitive rigid-capable printers that use belt or friction-based media feed systems, as they can only print on square-cornered, lightweight materials of uniform thickness.

The Arizona 550 GT uses Océ VariaDot imaging technology that enables a print head to produce ink droplets of variable size resulting in variable sized dots on the printed media. The ability to jet small droplets produces sharp images with smoother gradients and quartertones. The ability to jet larger droplets produces dense, uniform solids. The result is near-photographic image quality with sharpness only before seen at resolutions of 1,440 dpi or higher. In addition to superior image quality, Oce VariaDot imaging technology requires only four color inks. The use of only four colors and of variable-sized droplets results in significantly lower ink consumption than six color printers with fixed droplet inkjet technology. On average, all Océ Arizona printers consume less than 0.8 ml of ink per square foot total, including all print head maintenance procedures.

The Arizona 550 GT printer includes a White Ink Option that enables under-printing for non-white media or objects, over-printing for backlit applications on transparent media and/or printing white as a spot color. Other Océ Arizona models include the Arizona 350 XT (98.4 x 120 inch table, up to 248 ft(2)/hr print speed), the Arizona 350 GT (49.2 x 98.4 inch table, up to 239 ft(2)/hr print speed) and the Arizona 300 GT (49.2 x 98.4 inch table, up to 133 ft(2)/hr print speed).

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