By Takashi Mochizuki and Megumi Fujikawa
TOKYO--Canon Inc. said Tuesday that it plans to fully acquire
Swedish network video solutions provider Axis AB for around
Yen333.7 billion ($2.8 billion), in a search for new growth outside
its struggling traditional businesses.
The Japanese optics giant said it would make a tender offer for
the Stockholm-listed Axis's shares as soon as its bid was approved
by the Swedish Financial Supervisory Authority and Nasdaq
Stockholm.
Canon faces slowing growth in its core businesses--cameras and
office equipment. Its operating profit rose 7.8% and net profit
increased 10.5% in 2014, but the gains were mostly the result of a
sharply weaker yen, which fell 8% against the U.S. dollar and euro
last year.
Sales volume at the office-equipment unit dropped 20.7% and
tumbled 32.8% at the camera arm. According to research firm
Euromonitor, the global digital camera market is expected to have
shrunk by 20% in 2018 from a peak in 2010.
"The acquisition is a good and important step for Canon and its
investors because we have all been wondering where it will seek the
next growth source. Its traditional turf is increasingly slowing,"
said Mari Yada, a research analyst at Aizawa Securities.
Axis is the global leader in network security cameras. Industry
analysts expect rapid growth in the industry and many global giants
such as Sony Corp. are getting in. It captured 17.5% of the global
market in 2013, followed by Hikvision Digital Technology Co.'s 13%
and Panasonic Corp.'s 9.1%, according to IHS Technology. Canon also
offers security video networks but wasn't ranked in the top 10.
Canon and Axis developed network cameras together in 2002,
selling products from each brand.
Axis will remained based in Lund, Sweden, and keep its current
management team, workforce of 1,900 employees, and brand names,
both companies said.
Axis said in a statement that the board of directors would
unanimously recommend that shareholders accept the offer.
Analysts said they welcomed the move from the perspective of
Canon, which sits on a large pile of cash. The price, which
represents a 49.8% premium on Axis's share price as of Monday,
would have to be evaluated in the longer term, they said.
"Canon has high reputation for its hardware but it didn't have
much experience in surveillance security systems so buying the
lacking part was a good move," said Tetsuya Wadaki, a managing
director of Nomura Securities. "But the premium on the deal is very
high, so it must prove down the road that it can properly manage
the foreign company--say, raise its market share further to secure
the global top position."
Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and
Megumi Fujikawa at megumi.fujikawa@wsj.com
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