Canon grabs U.S. distributor to counter Ikon deal
TOKYO,
oct 08- Japan’s Canon Inc acquired a small U.S. office equipment
distributor and may snap up more to protect its market position after
key distributor Ikon Office Solutions was snatched out of its
hands.Canon’s stock has tumbled sharply since late August after rival
Ricoh Co (7752.T: Quote, Profile, Research, Stock Buzz) said it would
buy Ikon for $1.6 billion, and aim to replace Canon products with its
own printers and copiers in three to four years. [ID:nT32166]About 60
percent of the products handled by Ikon are made by Canon, and analysts
have warned the deal could deal a big blow to its position in the
world’s largest office equipment market.
Canon said it would buy
Newcal Industries, a longtime distributor of its copiers, scanners and
fax machines based in San Francisco, for an undisclosed sum. It added
that it would look for further investments, spurred on by the Ikon
deal.”Canon U.S.A. has been working on strengthening its direct sales
and dealer sales network but Ricoh’s case accelerated our sales
enhancement plan,” said a Canon spokesman who asked not to be
identified.”We plan to invest funds and take various measures and the
acquisition of Newcal is the first step of those measures.”Other rivals
have also been aggressive in snatching up dealers to bolster their
sales channels.
Xerox Corp bought Global Imaging Systems for
$1.5 billion in May 2007, while Konica Minolta Holdings earlier this
year clinched a deal for Danka Business System’s U.S. operations.Canon
will probably try to counter those moves by acquiring small
distributors across the United States, an analyst said.”Canon will
likely continue to purchase small and medium-sized dealers in each
state given that the mega dealers have been already bought by others,”
said Hisashi Moriyama, senior analyst at JPMorgan Securities Japan.
But
Moriyama said it was unclear if Canon will be able to make up for what
could be lost with Ikon going to Ricoh, and that deals like the
acquisition of Newcal would not really help its faltering share
price.The weakening U.S. economy and yen levels are bigger factors for
its stock. Canon closed Wednesday down 3 percent at 4,220 yen, though
it has clawed back 12 percent since sliding to a three-year low of
3,770 yen last week.”The U.S. macro economy and forex movements are the
most important external factors. Canon’s product lineup and
cost-cutting efforts will also be key to the stock price,” Moriyama
said.