Axis, Canon and the Hedge Fund

Author: 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.

***** '****' ****. *******, * ***** **** ** ******* ***** for *** ********* ** ** ******** ** ********* **** *** technicalities ** ******* *** *********** *** ********* ****.

** **** ****, ** ******* **** ***** *** ******* ********, and *** ***** ** ******* *** **** ***** *** ****, **** if ******* ***.

[***************]

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

* $** ******* ***** ****,******* **********, ****** **** * *** ** **** * ***** **** profit. ******* *** **** **** ******** **.*% ** **** *****.

Canon ** **%

*******, ******** ************* **** ******* ******** **% ** **** *****, ** **** have *** **** **** * ******** ** **** ******.

*** ******* ** **** **** **** **% ** *** * standard '******* ***' ********* ** ******* *** ********* ****** *** ******* *** 10.9%, ******** ****.

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

******* ***** **** ***** **** ****, *** *** ***** / Axis **** ** ****** ********* ***** ** ******.

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

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

**** ** ***** *** *********** **** ***, ***** **** ******* owned **%, ******* ***** ****** ***** ***** * ***** ******* million *** **** ***********, ** *** ***** ***** ***** **** back **** ** ***-***** ****** ** *****, ** ***** **% lower **** **** **** *** *** (******* ** *****'* **% premium *****).

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

******** ** *** ***** (*** *** ******) ** ***** $*+ billion ****, ** * **% ******* (*** *** ******* $*.* billion *****) ** ******* ** ********** ***** (** *** ********** for * ******* **** ~$*** ******* ****** ******* ***** ******).

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

***** ** ** *********** ********** *** ***** ** **** **** away *** ****** ******** **** ******* **** *** **** ****, the **** ** ***** ** *****. ******* ** ***** **** time, ******* ******* ***** * ****** *** ***** ** ** other ****** *********** **** *** ***** ** ******** *** **** deal.

Comments (10)

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.

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?

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"

...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.

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Most Recent Industry Reports

The IP Camera Lock-In Trend: Meraki and Verkada on Jan 18, 2019
Open systems and interoperability have not only been big buzzwords over the past decade, but they have also become core features of video...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP alleged that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Exacq Favorability Results 2019 on Jan 17, 2019
Exacq favorability amongst integrators has declined sharply, in new IPVM statistics, compared to 2017 IPVM statistics for Exacq. Now, over 5 since...
Testing Bandwidth Vs. Low Light on Jan 16, 2019
Nighttime bandwidth spikes are a major concern in video surveillance. Many calculate bandwidth as a single 24/7 number, but bit rates vary...
Access Control Records Maintenance Guide on Jan 16, 2019
Weeding out old entries, turning off unused credentials, and updating who carries which credentials is as important as to maintaining security as...
UK Fines Security Firms For Illegal Direct Marketing on Jan 16, 2019
Two UK security firms have paid over $200,000 in fines for illegally making hundreds of thousands of calls to people registered on a government...
Access Control Cabling Tutorial on Jan 15, 2019
Access Control is only as reliable as its cables. While this aspect lacks the sexiness of other components, it remains a vital part of every...
Avigilon Favorability Results 2019 on Jan 15, 2019
Since IPVM's 2017 Avigilon favorability results, the company was acquired by Motorola and has shifted from being an aggressive startup to a more...
Gorilla Technology AI Provider, Raises $15 Million, Profiled on Jan 15, 2019
Gorilla Technology is a Taiwanese video analytics manufacturer that recently announced a $15 million investment from SBI Group, saying this...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact