Axis, Canon and the Hedge Fund

Ouch... Talk about a squeeze play. I guess it proves that there's always an 'angle' to make a buck on any deal.

It's the financial equivalent of those who squat on domain names.

Talk about a Bluebird sale! I'm drooling over the commission somebody is about to make. And what a blunder on Canon's side to not see this in advance! They could have gone to Elliott a long time ago and got those shares first. (Or maybe they did? That would be even more interesting!)

Canon is used to the old "squeeze the squeezer" tactic, and may have hoped to prevent it, but certainly considered it. You may recall we discussed an earlier Canon acquisition, Oce, back when the tender offer was made. In that deal, a fund had also refused to sell, causing the closing to be delayed for 4 years!

During that time Canon still apparently ran Oce, and once they finally came to terms, the deal closed.

@Bob, even assuming Elliot had many or most of its shares before the tender offer was made, which is unclear, Elliot would not have had to sell them. Nor could Canon have just started buying up Axis on the sly in preparation for the tender either, as at every 5% increase in ownership of a public company in Sweden has to be reported.

One side effect is that Axis may not be allowed to delist until Canon gets the 90%, according to this Swedish attorney.

This means that Axis could continue to report their financials publicly in the interim.

Richard Berger of Canon Global had this to say recently:

With the settlement on April 15 for the 75.46 percent of the shares that had been acquired following the initial acceptance period, which concluded on April 1, Axis has already become a Canon subsidiary. While it would have been preferable to obtain 100 percent of the shares, having a minority of the shares owned by other parties does not pose an obstacle to our strategy going forward... [The] synergies are not affected by costs but rather lie in the opportunities going forward, we are confident that we will be able to realize the synergies of the deal.

What a weird move by the hedge fund.

Now that Canon controls Axis (85% of shares), they have cancelled Axis' traditional periodic dividend payment to shareholders.

However, Elliott submitted a proposal to disperse ~98% of profits as a dividend. Obviously, this is not going to happen since Canon controls the board / shares.