Axis, Canon and the Hedge Fund

By John Honovich, Published on Apr 28, 2015

Canon 'owns' Axis. However, a hedge fund is causing pains for the companies as it attempts to profiteer from the technicalities of closing the acquisition and delisting Axis.

In this note, we explain what Canon has already acquired, and why Canon is trapped and must close the deal, even if dragged out.

The ***** **** ******

* $** ******* ***** ****,******* **********, ****** **** * way ** **** * short **** ******. ******* say **** **** ******** 10.9% ** **** *****.

Canon ** **%

*******, ******** ************* **** ******* ******** 84% ** **** *****, so **** **** *** more **** * ******** of **** ******.

*** ******* ** **** they **** **% ** use * ******** '******* ***' ********* ** ******* the ********* ****** *** Elliott *** **.*%, ******** this.

Deal ***** ** ******

******* ***** **** ***** from ****, *** *** Canon / **** **** is ****** ********* ***** to ******.

**** *** *** *********:

***** ********

**** ** ***** *** technically **** ***, ***** they ******* ***** **%, selling ***** ****** ***** cause * ***** ******* million *** **** ***********, as *** ***** ***** would **** **** **** to ***-***** ****** ** worse, ** ***** **% lower **** **** **** are *** (******* ** Canon's **% ******* *****).

******* **** **** ****

******** ** *** ***** (and *** ******) ** spend $*+ ******* ****, as * **% ******* (for *** ******* $*.* billion *****) ** ******* an ********** ***** (** not ********** *** * company **** ~$*** ******* annual ******* ***** ******).

**** ****** *** **** Complications

***** ** ** *********** impossible *** ***** ** just **** **** *** highly ******** **** ******* will *** **** ****, the **** ** ***** to *****. ******* ** takes **** ****, ******* Elliott ***** * ****** but ***** ** ** other ****** *********** **** for ***** ** ******** the **** ****.

Comments (10)

Undisclosed Manufacturer #1

04/28/15 08:24pm

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

Avatar

Brian Rhodes

IPVMU Certified | 04/28/15 08:32pm

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

Matt Bode

04/28/15 08:56pm

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!)

Undisclosed #2

IPVMU Certified | 04/28/15 09:43pm

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.

John Honovich

IPVM | 04/28/15 11:35pm

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.

Undisclosed #2

IPVMU Certified | 05/05/15 02:41am

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.

John Honovich

IPVM | 05/25/15 10:56pm

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.

Undisclosed #2

IPVMU Certified | In reply to John Honovich | 05/25/15 11:54pm

However, Elliott submitted a proposal to disperse ~98% of profits as a dividend.

Elliot is looking for the highest short-term return, hence highest dividend. Anyway they are not asking for any bigger dividend than Axis board already had twice announced. They announced it even after the tender offer announcement and said that it would reduce the offer price that Canon would pay by the same amount.

I'm not sure I'm following your 98% number, how did you derive it?

John Honovich

IPVM | In reply to Undisclosed #2 | 05/26/15 12:48am

I understand Elliott's motivation but it's a little like me asking for you to buy me a Tesla. I guess I can ask but the chance of you saying yes is nil, correct?

As for 98%, Elliott proposed, "a dividend of SEK 6.00 per share shall be paid to shareholders - SEK 416,767,500, to be carried forward - SEK 5,937,306"

Undisclosed #2

IPVMU Certified | In reply to John Honovich | 05/26/15 03:50am

...but it's a little like me asking for you to buy me a Tesla.

If you can afford $0.40 kW/h, you can afford the car. :)

I agree with your math but what do you make of this? They are showing 2014 as a 5.50 krona dividend, not 6.00. Mind you this is pre-Elliot.

Yet they never seem to be anywhere near the 33% mark in recent history.

Read this IPVM report for free.

This article is part of IPVM's 6,599 reports, 889 tests and is only available to members. To get a one-time preview of our work, enter your work email to access the full article.

Already a member? Login here | Join now

Related Reports

Drako's Companies (Brivo, Eagle Eye) Take $4+ Million in PPP Funds on Jul 14, 2020
While centimillionaire Dean Drako is the owner of two of the largest SaaS...
CDW Sells School District 36 Low-Res, No Blackbody Hikvision Fever Cameras With Federal Funds on Oct 01, 2020
Mega IT distributor CDW sold low-resolution Hikvision fever cameras with no...
Hikvision Buys Baltics' Largest Distributor (BK Group) on Aug 20, 2020
While Hikvision faces global scrutiny over its connections to the PRC...
Axis / Avigilon Patent Litigation Ends With 3 Invalidated Patents on Sep 09, 2020
The multi-year, multi-district patent litigation between Canon and Axis...
US DoD Declares "Can No Longer Do Business" With Contractors Using Dahua, Hikvision, Huawei on Apr 08, 2020
The US Department of Defense has confirmed to IPVM that they fully support...
Huawei HiSilicon Shortage Impacts Surveillance Manufacturers on Aug 14, 2020
Huawei acknowledged problems and challenges for its HiSilicon chip business,...
Axis Compares Fever Camera Sellers to 9/11 on Sep 18, 2020
Axis Communications, the West's largest surveillance camera manufacturer, has...
Hikvision Put on US DoD "Communist Chinese Military Companies" List, Faces Risk of Presidential Sanctions on Jun 26, 2020
The US DoD has put Hikvision on a list of "Communist Chinese Military...
Honeywell Warns of Huawei, Advocates Futureproofing on Aug 31, 2020
For years, Honeywell has profited from OEMing Dahua and using Huawei...
Junk Debt Laden Convergint Facing Coronavirus Crisis on Apr 08, 2020
Convergint has $1+ billion in junk debt putting significant pressure on the...
Verkada Access Control Tested on Sep 09, 2020
Verkada raised $80 million earlier in 2020, expanding from video into access...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...
JCI Sues Genetec For Patent Infringement on Jul 13, 2020
Surprisingly, security giant JCI has sued their partner, security software...
70+ Security Industry Companies Take $50 Million PPP Funding on Jul 15, 2020
70+ security industry companies have taken more than $40 million in PPP...
Axis Exports To China Police Criticized By Amnesty International on Sep 21, 2020
Axis Communications and other EU surveillance providers are under fire from...

Recent Reports

Consultants Online Show LIVE Today! on Oct 27, 2020
IPVM's 7th online show will feature 20+ consultants and recruiters presenting...
Eagle Eye Networks Raises $40 Million on Oct 27, 2020
Eagle Eye has raised $40 million aiming to "reinvent video...
Hikvision Q3 2020 Global Revenue Rises, US Revenue Falls on Oct 27, 2020
While Hikvision's global revenue rises driven by domestic recovery, its US...
VICE Investigates Verkada's Harassing "RawVerkadawgz" on Oct 26, 2020
This month, IPVM investigated Verkada's sexism, discrimination, and cultural...
Six Flags' FDA Violating Outdoor Dahua Fever Cameras on Oct 26, 2020
As Six Flags scrambled to reopen parks amid plummeting revenues caused by the...
ISC Brasil Digital Experience 2020 Report on Oct 23, 2020
ISC Brasil 2020 rebranded itself to ISC Digital Experience and, like its...
Top Video Surveillance Service Call Problems 2020 on Oct 23, 2020
3 primary and 4 secondary issues stood out as causing the most problems when...
GDPR Impact On Temperature / Fever Screening Explained on Oct 22, 2020
What impact does GDPR have on temperature screening? Do you risk a GDPR fine...
Security And Safety Things (S&ST) Tested on Oct 22, 2020
S&ST, a Bosch spinout, is spending tens of millions of dollars aiming to...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Deceptive Meridian Temperature Tablets Endanger Public Safety on Oct 21, 2020
IPVM's testing of and investigation into Meridian Kiosk's temperature...
Honeywell 30 Series and Vivotek NVRs Tested on Oct 21, 2020
The NDAA ban has driven many users to look for low-cost NVRs not made by...
Ubiquiti Access Control Tested on Oct 21, 2020
Ubiquiti has become one of the most widely used wireless and switch providers...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...
Mexico Video Surveillance Market Overview 2020 on Oct 20, 2020
Despite being neighbors, there are key differences between the U.S. and...