*NEWS*INDIA:GESTETNER,RICOH CLEAR MERGER/2004-09-04

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*NEWS*INDIA:GESTETNER,RICOH CLEAR MERGER/2004-09-04

 user 2013-06-22 at 9:48:09 am Views: 99
  • #2057
    Gestetner, Ricoh clear 1:6 merger
     
    Our Corporate Bureau / New Delhi August, 2004
     
     
     
    Office automation firms Gestetner India Ltd and Ricoh India will merge to operate as a single entity. Their respective boards have given their consent for the merger.
     
    The companies put together have a turnover of Rs 150 crore and a 22 per cent market share in the digital multifunctional imaging and printing products.
     
    Under the deal worked out by Ernst & Young, a share swap ratio of 1:6 has been recommended whereby six shares of Ricoh will be allotted for every share of Gestetner. Interestingly, the Tokyo-based, $18 billion office automation giant Ricoh has a controlling stake in both the companies.
     
    “Despite the same parentage we were competing in several similar product categories. But after the merger we can leverage our combined sales and distribution network to fight the competition better,” said K Swetharanyan, managing director, Gestetner India.
     
    After Ricoh acquired Gestetner plc in 1998 in a worldwide takeover, the firm’s Indian subsidiary too went to Ricoh. “Till recently our strategy was to grow in India with multiple brands. But now we feel that working as a single company will maximise returns,” said Masayoshi Yoshino, general manager, (international business group), Ricoh. The promoters’ holding in the company post the merger will be close to 73 per cent and the rest will be publicly held.
     
    According to the proposed scheme, the merger would be subject to approval of Kolkata and Mumbai High Courts.
     
    In a financial restructuring bid to facilitate the merger, the parent firm has also waived off the five-year dividend of Rs 10.6 crore to be paid by Ricoh India.
     
    “The merger will give us greater access to the latest product lines developed internationally by Ricoh. We are also planning to double our sales to Rs 300 crore with a market share of 30 per cent by 2007,” said N Maitra, MD Ricoh India.
     
    In India the office automation market is led by Xerox, and Ricoh faces stiff competition from players like Canon, Hewlett-Packard and Dell.
     
    According to Maitra, the combined entity’s new management structure is still being worked out and the process of the merger is likely to be completed by March 2005

    * Post was edited: 2004-09-04 13:00:00