Canon to Acquire Showa Information Systems

Jim Hamilton
Nov 16, 2011

Last week Canon announced its plans to acquire Showa Information Systems (SIS), a Japanese manufacturer of high-end printing systems. If the acquisition goes as Canon expects it to, the deal will involve the purchase of around 12 million shares at a price of 200 yen per share. This would make the total sale more than 2.4 billion yen or about $31 million. Canon expects the share acquisition to be completed around May of 2012. Canon has already concluded an agreement with Showa Information Systems’ largest shareholder (Mars Engineering Corporation), which owns about 26% of SIS.

SIS was established in 1973 and has been active in the development of Japanese language processing technologies for office printers, including what it describes as the world’s first kanji printer. With its SX series of printers it has also competed in high-speed continuous-feed printers for the data center printing. A key strength is its proprietary controller, whose technology may also be used for languages that use two-byte characters. Canon hopes to leverage this capability first in China.

SIS has been selling Océ continuous feed printers for about a decade. In November of 2010 SIS began an alliance with Canon to sell Océ office printers. Océ also worked with SIS when it opened its first showroom for Océ high-speed continuous-feed printers in Asia. (The opening of the Makuhari showroom occurred in July of 2011.)

The news of the acquisition follows a disappointing third quarter report by SIS in which it reported a small loss of 291,743 yen (less than $4,000) through the first three quarters. It also lowered its full year net sales forecast to 11.2 billion yen, which is lower than its 2010 actual net sales of 12.2 billion yen.

The purchase is part of Canon’s long-term strategic plan intended to expand its business into new areas. The strategic plan’s slogan is “Beyond Canon, Beyond Japan” and is described as an effort to “provide non-Canon products/services…particularly in the area of IT solutions.” Canon identified four advantages to the acquisition of SIS:

  • Strong sales channel and solid customer base
  • Good complementary relationship in products and technologies
  • Maintenance and service network for continuous-feed printers
  • Opportunity for business expansion into Asia, particularly China

A key advantage not mentioned by Canon is that SIS is a distributor of Kodak and Screen products. And so a relatively inexpensive acquisition not only helps Canon strengthen its channel for Océ products in Japan and helps secure the two-byte controller technology for expansion into China, but also positions itself favorably versus two key competitors in the high-speed inkjet market.

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