Canon acquires Swedish network surveillance leader Axis for $2.8 bn

Japanese imaging giant Canon Inc has struck a friendly deal to acquire Sweden's Axis AB, a leader in network video surveillance technologies, for approximately 23.6 billion Swedish kronor ($2.8 billion) in an all-cash deal aiming to expand into fast growing video surveillance market.

Axis M5014 PTZ HD Network Camera

Under the terms of the offer, Canon will pay 340 Swedish kronor per share of Axis for all of its outstanding 69.5 million shares.

The offer price represents around 50-per cent premium to the closing price of 226.9 kronor for Axis share on Nasdaq Stockholm on 9 February, and about 36 per cent more than the stock's highest price ever quoted since its listing, that was 250.8 kronor on 29 November 2013.

The offer price will be adjusted for a 2014 dividend of 6 kronor, if paid before the settlement of the offer.

Further to the news, Axis shares jumped 50 per cent to 340 kronor yesterday in Stockholm, while Canon ADRs rose 2.3 per cent to $32.04 in New York.

Axis, founded in 1984, was the first company in the world to introduce a network camera and is a global leader in providing network video surveillance equipment for shopping malls, airports, casinos, banks and prisons.

The company has around 1,940 employees in more than 40 countries, supported by a network of over 75,000 partners across 179 countries. Axis stock is listed on Nasdaq Stockholm.

For 2014, the company reported sales of $654 million with a net profit of $65 million.

Axis's board of directors has recommended the company's shareholders to accept Canon's offer.

Three of its largest shareholders Inter Indu AB, LMK Industri AB and Aktiebolag Granspecialisten, who hold a combined 39.5-per cent stake in the company, said that they would accept the offer on certain conditions.

According to professional services firm Deloitte, the offer price is considered as fair from a financial perspective.

The acceptance period of the offer is expected to be 3 March-1 April 2015.

Under sagging sales of its cameras due to growing penetration of high-tech smartphones with high-quality digital cameras, the global camera giant is looking to diversify its business in other high-growth areas.

The video surveillance system market has been growing rapidly in recent years, and Canon, which already makes surveillance cameras for offices and public institutions, believes that it is a promising area that can drive future growth.

The combination of Canon's excellent optical and imaging technologies and Axis's outstanding network image processing technology will enable them to offer innovative sophisticated network video solutions, Canon said.

Further, the combination will have a strong intellectual property portfolio as well as widespread distribution and service network which will enable the company to introduce innovate products and services to its customers.

On completion of the deal, Axis will continue to be separate legal entity within the Canon group and will be led by its current president and CEO Ray Mauritsson and his management team with the company's offices and development centres remaining in their current locations.