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* Says potential value of Oce justifies higher offer

* Hermes owns 3.3 percent of Oce shares

* Oce says still supports Canon offer (Adds Oce comment)

By Harro ten Wolde

AMSTERDAM, Jan 11 (Reuters) - Hermes Focus Asset Management said on Monday it would not tender its shares in Dutch photocopier and printing systems maker Oce NV (OCEN.AS) to Canon (7751.T), fuelling hopes for an improved offer from Canon.

The Japanese camera and office equipment maker's 730 million euro ($1.06 billion) offer is already opposed by 10 percent shareholder Orbis Portfolio Management. [ID:nT209918]

Hermes said that while it welcomed the strategic direction of the intended merger, it was concerned "the offer terms do not represent a fair sharing of value between the shareholders of Canon and those of Oce."

"Were Oce to achieve Canon Business Machines' level of operating profitability, which we recognize is among the highest in the industry, Oce's equity would indicatively be worth some four times as much as the offer price," Hermes said in an open letter to Oce and Canon management.

Hermes said it currently holds 3.3 percent of Oce shares.

Oce said in a statement that its strategic review process which led to supporting the Canon offer, had been "thorough and complete.

"The Management and Supervisory Boards of Oce fully and unanimously support the transaction with Canon," the company, which competes with Xerox (XRX.N) and Konica Minolta (4902.T), said in the statement.

Canon in November offered 8.60 euros per share for the Dutch company, a 70 percent premium to the share price just before the bid.

Canon said it would declare the offer for Oce unconditional if 85 percent of shares were tendered.

Since the end of November, Oce shares have been hovering just below the bid price, indicating shareholders expect the offer to succeed.