Canon in Talks to Buy Axis Communications for £1.85bn

Axis Communications’ board of directors have unanimously recommended that its shareholders accept an offer from Canon Inc to buy the company for 23.6bn Swedish kronor (£1.85bn).

If the deal does go through it will be Canon’s second major acquisition in the security space in less than 12 months after agreeing to buy Milestone Systems shortly before IFSEC International 2014.

Long a stellar name in the consumer camera world the Japanese giant has struggled to break into the surveillance market.

Speaking to IFSEC Global last year the company’s product strategy and planning director admitted that Canon’s market share was probably less than half a percent.

But the acquisition of Axis – the world’s eighth biggest security company according to the 2013 asmag Top 50 (and star of this IFSEC Innovators video) – will propel the company into the global big league alongside the likes of Samsung Techwin, Tyco Security Products and Hikvision.

Buying the Swedish surveillance pioneers, which launched the world’s first-ever network camera in 1996, would give it a serious foothold in a global surveillance market expected to be worth £27.6bn by 2020.

And not just in surveillance; the value of Axis’ stock has soared 14% this year following the company’s first foray into the access control market.

A statement from the board of directors at Axis said that Roland Vejdemo, chairman of the board of directors, was “of the following opinion […] Axis has a potential for an accelerated growth that could create a greater value than the Offer and thus be of interest for investors with a long-term perspective.

“However, he is of the opinion that the current stand-alone plan would not lead to a greater value than Canon’s offer in a long-term perspective. New future scenarios, including acquisition strategies, which the Board of Directors, together with its financial advisors, have modeled to assess the opportunities for Axis to achieve a greater value than Canon’s offer, includes too many and great risks.

“Roland Vejdemo has also, amongst other, taken into account the advice of the financial advisor of the Board of Directors when forming his opinion. Therefore, he recommends for shareholders to accept the offer from Canon also in a longer term perspective.”

Says Richard Berger, a spokesperson for Canon Inc: “We are very excited about the prospect of welcoming Axis into the Canon Group. We see exciting future opportunities through the combination of our optical technologies and Axis’s innovative network technology, which will enable us to contribute to creating a safer and more secure world.”

Canon’s offer, which comprises an agreement to buy Axis shares at 340 kronor each in cash (nearly 50% more than the stock’s closing price on Monday), is conditional to a dividend that Axis intends to pay its shareholders.

Revenue from Canon’s traditional camera business has fallen for the last three consecutive years, although this has been offset to some extent by rising sales of printers, peripherals and other office products.

Read what IHS – a market research firm specialising in security, surveillance and access control – has to say about the mooted acquisition and its implications for the market.

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