Canon deal may up ante for Xerox
Matthew Daneman – Staff writer
Business – November 17, 2009 - 3:00am
One of Xerox Corp.’s biggest business rivals is planning to buy another.
Japanese electronics giant Canon Inc. announced Monday it will purchase Dutch production printing company Oce NV for $1.1 billion.
Each company goes head to head with Xerox in a particular segment of the printing industry, with Canon being a major player in office equipment and Oce specializing in particularly high-end production equipment.
Oce and Eastman Kodak Co. have a joint marketing agreement under which the Dutch company sells Kodak-made NexPress digital presses in some European markets.
A Canon-Oce merger “certainly gives Xerox a more formidable competition … if they can pull it together,” said Andy Slawetsky, president of Industry Analysts Inc., a Rochester-based imaging industry market research firm. “The potential is there for them to really be a force against Xerox.”
Canon already was becoming a greater force for Xerox to reckon with as it announced in September that it and Hewlett-Packard Co. would jointly market a number of multifunction office products.
“Through the merger of Canon and Oce, we believe that we will be able to realize clear benefits … 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,” Canon President Tsuneji Uchida said in a statement.
Under the deal, Oce would be a division of Canon. The cash transaction is expected to close in early 2010.
Oce barely eked out a profit in the first six months of 2009, with its net income down 96 percent — woes that it chalked up to the overall economy.
Slawetsky said it was no surprise that a struggling Oce was snapped up by another graphic arts company and that Xerox itself might have considered the acquisition in recent months.
Between the HP deal and the Oce purchase, which includes the company’s well-regarded sales force, Canon would end up with arguably a broader set of products at different price points than Xerox, which employs about 6,900 in the Rochester area, Slawetsky said.
However, said Xerox’s Regina Testa, the company “is entrenched as the leader in the graphic communications space, and this agreement won’t impact that position.”
“Xerox has a total value proposition that is unmatched by our competition — including a mix of technology, workflow and business development,” said Testa, vice president of graphic communications for the company’s Global Business group.
Meanwhile, Testa said the Oce-Canon sales force “is fragmented and lacks the in-depth understanding of the companies’ disjointed product lines.”
Original Post