Canon Inc Chief Executive Fujio Mitarai said his company had the funds and willingness for more acquisitions this year after a planned 23.6 billion Swedish crown ($2.8 billion) takeover of network video surveillance leader Axis AB. Mitarai has been leading efforts to find higher-growth businesses to complement Canon's imaging expertise, and help the Japanese company expand beyond a camera market under attack from smartphones sporting competitive image-capturing capabilities.
Canon's offer for Axis represented a premium of nearly 50 percent to the stock price before the announcement, a price some analysts said was high enough to ward off rival bids.
"If you buy a cheap company, you need to spend on drastic restructuring," Mitarai told Reuters in an interview on March 03. "I only buy good companies, even if they're expensive."
Canon, which earned over 80 percent of revenue overseas in 2014, said it would pay for its biggest purchase ever in cash. It held 845 billion yen ($7.05 billion) in cash and cash equivalents at the end of December.
Mitarai said Axis' high growth would help Canon recover its cash position in two to three years. He said the pair plan to come up with a long-term growth strategy in the next two to three months. He also said the company was interested in acquiring more businesses serving other businesses - or "B-to-B" companies - so it can expand further beyond consumer-targeted cameras.
"We have room to buy and plenty of willingness to buy. The question is whether there are appropriate targets," he said.
Canon reported a slight increase in fourth-quarter operating profit, as a depreciating yen and rising sales of office equipment such as photo copiers offset weakness in cameras. It also announced an increase in its regular dividend.
SHAREHOLDER RETURNS
Asked whether Canon could cancel treasury shares to further increase returns to shareholders, Mitarai said there were no plans to do so as the global economy had not fully recovered from the financial crisis.
"We are not considering cancelling now," he said. "Ever since the 'Lehman shock' global financial markets are still carrying risk," Mitarai said, referring to the bank collapse widely regarded as triggering the crisis. Japan's government has been calling on companies to improve return on equity (ROE) and attract more foreign investment. But Mitarai, who headed the Keidanren business lobby from 2006 to 2010, said he could not fully endorse a push to boost ROE alone.
"Until we make a complete recovery from 'Lehman shock', my priority will be to protect the company by deliberately securing a high capital ratio and ensuring it can run on its own funds," he said.