Canon Inc said it will start providing its latest multi-functional printer models to Hewlett-Packard later this year, broadening the long-running partnership between the companies.

Canon has long supplied HP with laser printer engines and other parts, but will now broaden that arrangement to include its newest workplace printers -- which combine copy, printer and fax functions.

Initially, the machines will carry the Canon brand, but will eventually switch to HP. Terms of the deal were not disclosed.

Japan's Canon expects the new deal to help drive its office equipment sales, after its U.S. business took a hit last year when Ricoh Co Ltd bought major U.S. office equipment distributor Ikon Office Solutions. Previously Canon machines had represented 60 percent of the products Ikon handled.

HP, meanwhile, is banking on the arrangement to bolster its managed print business. It currently has about 2,400 managed print customers.

HP will now have the full line of hardware to bring to the customer, said Bruce Dahlgren, senior vice president of sales and services in HP's imaging and printing group. And [Canon] will be able to leverage our managed print service as a way to get their copiers sold.

HP said it would create a new business unit within its imaging and printing group, calling it managed enterprise solutions. The unit will manage customers' entire portfolio of printing services, from hardware to supplies to support. Dahlgren will lead it.

Prior to the announcement, shares in Canon closed down 3.4 percent at 3,450 yen, underperforming the Nikkei average .N225, which lost 2.3 percent. Shares of HP were down 18 cents, or less than 1 percent, at $45.84 on the New York Stock Exchange.

(Reporting by Nobuhiro Kubo and Kiyoshi Takenaka in Tokyo and Gabriel Madway in San Francisco; Editing by Chris Gallagher, Andy Bruce and Dave Zimmerman)

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