CANON Inc, Japan's biggest office-equipment maker, fell the most in more than five months in Tokyo trading yesterday after Ricoh Co agreed to buy Ikon Office Solutions Inc, the largest copier distributor in the United States.

Canon shares fell 5.2 percent to close at 4,790 yen (US$43.74) on the Tokyo Stock Exchange, the biggest decline since March 3.

Ricoh added 2.9 percent to 1,777 yen, after gaining as much as 6.8 percent.

UBS AG said the acquisition may cause Canon's North America revenue to fall by as much as half, while Merrill Lynch & Co estimates the Tokyo-based company's overall sales would drop about 3 percent if it lost Ikon as a sales channel.

The purchase adds 400 sales locations for Ricoh in the US, Canada and west Europe, markets that together account for more than half of Canon's sales.

"It is regrettable that Canon, which has more than 450 billion yen worth of treasury stock, chose not to acquire Ikon," Ryohei Takahashi, an analyst at Merrill in Tokyo, wrote in a report Wednesday, obtained by Bloomberg News. "Canon looks set to lose market share."

Ricoh said Wednesday that it's offering US$1.62 billion, or US$17.25 a share, for Pennsylvania-based Ikon, in the Tokyo-based company's largest acquisition. That's 11 percent more than Ikon's closing price on Tuesday.

Ikon generated 55 percent of sales last fiscal year from Canon and 25 percent from Ricoh. In the three months ended June 30, Canon earned 20 percent of sales in Japan and 63 percent in the Americas and Europe. Ricoh generated 45 percent and 48 percent from the respective regions.