IBM AND RICOH BEGIN OPERATIONS

[Anonymous]

IBM and Ricoh’s joint venture company begins operations
InfoPrint
Solutions Co. (IPS), the joint venture printing company announced
earlier this year by IBM and Ricoh, has begun operations with 1,200
employees around the world.
The
company was formerly IBM’s Printing Systems Division. With the closing
of the agreement, Ricoh now owns 51 percent of the joint venture and
will progressively acquire the remaining 49 percent over the next three
years as the joint venture becomes a fully owned subsidiary. IBM
received $725 million at closing.InfoPrint Solutions Co. has operations
in Argentina, Australia, Brazil, Canada, China, France, Germany, Hong
Kong, Italy, Japan, Mexico, Peru, Singapore, Spain, Switzerland,
Taiwan, the U.K. and the U.S., and has plans to expand to other
countries in the third quarter of this year, subject to the completion
of local information and consultation processes.The joint venture,
based on IBM’s printing operations which generated approximately $1
billion of revenue in 2006, will continue to benefit from access to
IBM’s powerful worldwide distribution and sales network. IBM client
teams, business partners and dealers will continue to offer InfoPrint
printing and output solutions, and InfoPrint Solutions Company will be
IBM’s preferred global print solutions provider. The InfoPrint product
brand and IBM’s extensive printer development capabilities are also
part of the joint venture.

IBM will provide maintenance services
to InfoPrint Solutions Company for one year under a services agreement,
after which more than 1,000 IBM printer maintenance specialists may
join the new company, subject to local business conditions and
completion of local information and consultation processes.”With this
launch, we have created a billion-dollar enterprise with the backing of
two undisputed industry leaders, IBM and Ricoh. Together, we will drive
the next generation of innovation in output solutions,” said Tony
Romero, CEO and President, InfoPrint Solutions Company. “Our plans for
the joint venture include greater investment in research and
development, enhancing our professional services capabilities, and
increasing the size of our sales and support organization. Our intense
focus on strategic output management means our current and future
customers will benefit from a new level of products, services, and
solutions built to address their business needs.”InfoPrint Solutions
Company, launching with 40 years in the printing industry and more than
20 years of joint innovation and development between IBM and Ricoh,
offers output solutions for general office, industrial, enterprise and
commercial printing environments for customers of all sizes – from
small businesses to large enterprises. The investment from Ricoh will
increase the company’s portfolio with new product and solutions
offerings in both the production and general office markets.

“Today
is an historic moment both for IBM and Ricoh and more importantly, an
industry first. The creation of InfoPrint Solutions Co. brings together
the best of two industry leaders, and greatly enhances the Ricoh
portfolio of offerings,” said Norio Tanaka, Corporate Senior Vice
President of the Production Printing Business Group at Ricoh Company
Ltd. “This unique combination puts IPS ahead of its competitors and
positions the company to lead the market by focusing on the goal of
creating true operating efficiencies and value for customers.”Since the
initial agreement in January 2007, new and existing customers have
demonstrated their commitment to the joint venture across industries.
Today, InfoPrint Solutions Co. also announced a major customer
engagement with 21st Century Insurance Group, a leading insurance
company based in the U.S.Said Jim Chalker, Director of IT at 21st
Century Insurance Group: “Working with a company that has the
entrepreneurial drive of a start-up yet the support and global backing
of two market leaders has meant great things for us as a customer.
InfoPrint Solutions Co. is helping us reduce output costs and increase
efficiency, meaning we can pass these savings on to our own most
important asset – our customers.”

IBM received $725 million in
cash at the closing. The cash received was consideration for the
initial 51 percent acquisition of the joint venture by Ricoh as well as
a prepayment for the remaining 49 percent to be acquired and certain
royalties and services to be provided by IBM to InfoPrint Solutions
Company. Final consideration for this transaction will be determined at
the end of the three-year period based upon the participation in the
profits and losses recorded by the equity partners. As a result of the
transaction, IBM expects to record a second quarter pre-tax gain of
approximately $80 million and a total pre-tax gain of approximately
$250 million over the three-year period. Both gain amounts are pending
final valuation of the agreements signed with the joint venture as well
as final determination of transaction related expenses. Further details
will be included in IBM’s second quarter earnings report and Form 10-Q
filing.

[Author]

June 7, 2007 at 3:08 PM