Océ management conducted a well-attended press teleconference today to provide further details of its acquisition by Canon. Jan Hol, who was interviewed earlier by WhatTheyThink, was on the line from Europe, and North America was represented by Mal Baboyian, president, production printing systems, Océ North America, and Joe Skrzypczak President and CEO of Océ North America. Océ reiterated that the intent of the acquisition was to create a global leader in the printing industry and to deliver scale in manufacturing, sales and marketing and R&D. Océ had been seeking an arrangement of this nature because it was clear that increased scale was among the essential success factors to create value and prosperity for stakeholders, something that was increasingly difficult for Océ to achieve as a standalone entity.
A few new details came out of this conference, including:
- Océ will consist of three strategic business units (SBUs): Commercial Printing Systems, Wide Format Printing Systems (including Canon’s portfolio), and Business Services. It remains to be seen whether Canon’s relatively new services business will be rolled into the Océ Business Services SBU.
- Océ, as a wholly owned division of Canon, will maintain its current responsibility for portfolio marketing, sales and services and the management of the SBUs will report to the Océ corporate board. Océ will lead R&D and manufacturing in The Netherlands, Germany and Canada. Sales and marketing will be organized by country.
- A steering committee is being established to lead the integration between Canon and Océ for the office, including regional integration teams that include both Canon and Océ representation. At this point, management indicates it is unlikely an outside consulting firm will be engaged to facilitate the integration, which is expected to take up to three years.
- The companies still plan to conclude the acquisition in the spring of 2010, at which time, listing of Océ shares on Euronext will be suspended.
- When asked about potential counterbids, Hol stated, “As we stated last Monday, both the boards of both companies have agreed it is a fair price for shareholders. We are not in a position to provide further comments on the likelihood or unlikelihood of other bids.”
- It is not clear what the outcome of the Océ/Konica Minolta alliance will be, although management on the call indicated Konica Minolta seems open and willing to work through the issues in the best interests of both companies and their customers, with Océ retaining an OEM contract that will provide Konica Minolta service, parts and consumables through the Océ channel for at least five years. It was too early to tell what might become of the joint R&D efforts the two companies had underway.
- There are still many decisions to be made about where some specific products will fit in the portfolio and by whom they will be sold. Although there is little overlap, there is some, especially in the conjunction of office and production with products like the Océ 4000 family and the Canon imageRUNNER family. Nor is it clear where the Canon 7000 family will fit. It was intimated that some products would be sold by both the office and production groups.
- With respect to PRIMSA, Baboyian stated, “PRISMA has been a cornerstone for us in production printing, very well accepted in the market. It is too premature for those kinds of details. We have to meet with Canon personnel during integration, but certainly PRISMA has been a very powerful software product portfolio we will look to capitalize on as much as possible, but we will also look at the Canon offerings as well.”
- Océ has about 1,400 direct sales professionals in the Americas, and Canon has slightly less than that. Although specific figures were not available, Hol indicated that Canon/Océ direct sales forces were about balanced in terms of numbers in Europe. According to Skrzypczak, Oce´ is 99% direct in the Americas, except in wide format where there is a blend of dealer and direct sales.
Skrzypczak summed it up by saying, “Both companies share a huge commitment to technology and innovation. We also share similar values, a long term approach and a solid stakeholder approach. For Océ, this is a landmark event since it will become a wholly owned entity of a larger company. It is also a landmark event for Canon, since they have never acquired a company this large before, and have mostly grown organically. Canon is a monobrand company with a successful track record. Canon has agreed to maintain the strong Océ brand in all relevant markets. It is a full step forward.”
Discussion
By Michael J on Nov 20, 2009
Cary,
Thank you. This is the best granular run down on how the acquisition might play out.
Do you have any thoughts about how this might affect HP. I think I read that HP and Canon recently did a deal for HP to sell Canon production equipment.
By Cary Sherburne on Nov 20, 2009
Michael, during the call, the question was asked, and both Joe and Jan indicated that they have not heard that there would be any impact. My perspective is that Canon will continue to carry on with some, if not all, of its industry partnerships, similar to the way that Xerox has with XMPie and Kodak with CREO, in this world of co-opetition ...
Canon has been silent on the subject of this acquisition other than the press release.
By Andres Ferrer on Nov 20, 2009
By reading Océ executives comments, one could conclude that it is Océ the company which will take more from this agreement, whereas the actual announcemeny if read in depth, states clearly that it is Canon who has taken the opportunity to buy a troubled and in a dire financial situation Production Print Global Corporation which may contribute dearly to its long-term goal of becoming a leader also in the High Production Digital Print arena.
Being a Japanese company the purchaser, I doubt they will keep the Océ brand for long.
Just look at what Ricoh has made with all its purchased coompanies in the past decade.
By Michael J on Nov 20, 2009
Interesting. The thing about Xmpie and Creo is that those are entangled with Xerox and Kodak. I wouldn't be all that surprised if they get spun off sooner or later.
For whatever it's worth, I have to believe there are folks at HP who are looking very carefully at potential risks of Canon's decisions moving forward.
By Cary Sherburne on Nov 20, 2009
You will hear no argument from me on the HP point! However, I would not expect to see either XMPie or CREO spun out. While they provide services to third parties, both have become pretty interwoven with their respective parent company's strategic direction.
By Clint Bolte on Nov 23, 2009
With 16 different (now 15) digital print engine manufacturers can't help but sense that more consolidations are to be expected. Most of these folks are concentrating on the Managed Print Services arena rather than classical commercial printing; hence not as well known or followed by the printing industry.
By Michael J on Nov 24, 2009
Thanks for pointing to the blind spot that the classical commercial print industry has for Managed Print Services. Based on market opportunities it seems to be the real growth opportunity for print. Xerox's purchase of ACS is just one more data point. $6 billion is a big bet.
It's interesting that they have set up the unit as Enterprise Print Services. Based on what I'm seeing the brief is to manage print both inside and outside the enterprise. While Xerox is focused on global enterprise, there might be an opportunity for commercial printers with smaller businesses.
I have to believe that if family owned commercial printers joined up with family owned MPS outfits they could offer a version a Business Printing Service for family owned business.