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 user 2008-08-28 at 1:30:21 pm Views: 66
  • #20385
    Ricoh to Buy Ikon Office Solutions for $1.62 Billion 


    Aug. 08- Ricoh Co., Japan’s second-largest
    maker of office machines, agreed to buy equipment distributor
    Ikon Office Solutions Inc. for $1.62 billion in cash to expand
    its sales and services operations in the U.S.
    Ricoh offered to pay $17.25 a share, Malvern, Pennsylvania-
    based Ikon said in a statement today. That’s an 11 percent
    premium over Ikon’s closing price of $15.56 yesterday and the
    largest acquisition for the Japanese company.
    The deal adds Ikon’s 400 sales locations in the U.S., Canada
    and Western Europe to Ricoh’s primarily Japan-based business. The
    Asian nation accounted for 46 percent of Ricoh’s revenue of 2.22
    trillion yen ($20.2 billion) last year. The acquisition takes the
    last independent printer distributor in North America off the
    market after Global Imaging Systems Inc. and the U.S. unit of Danka
    Business Systems Plc
    were bought in the last 18 months.
    “It’s a reasonable price,” said Shannon Cross, an analyst
    with Cross Research in Livingston, New Jersey. She rates Ikon a
    “buy.” “Ricoh gets an expanded U.S. distribution network.
    There’s not another asset like it anymore.”
    Ikon got 87 percent of its 2007 sales of $4.17 billion from
    North America. The deal is expected to close in the fourth
    quarter and will be financed with a mix of internal and external
    funding, Tokyo-based Ricoh said.
    Ikon rose $1.46, or 9.4 percent, to $17.02 at 4:04 p.m. in
    New York Stock Exchange composite trading, the biggest
    percentage increase since April 10. Ricoh fell 1.6 percent to
    1,727 yen on the Tokyo Stock Exchange.

    Canon’s Move?
    Ikon has faced shareholder pressure to sell the company or
    recapitalize the shares to change its stock structure and boost
    value to investors. Ikon eliminated about 350 jobs in January to
    trim costs after first-quarter profit fell 45 percent. The
    company has also reduced executive bonuses as sales fell for 11
    straight periods through the third quarter of 2007.

    About 25 percent of Ricoh’s machines are sold through Ikon,
    compared with as much as 40 percent for Canon Inc., the largest
    Japanese office equipment maker, Cross said. Canon has lost
    about 50 percent of its U.S. sales network as the distributors
    have been bought by printer makers.“The biggest question is what Canon’s response will be,”
    said Cross. “Does another bidder emerge?” Canon spokeswoman
    Patricia Hall declined to comment.“We feel that this is good for Ikon shareholders and good
    for Ricoh shareholders,” said Ricoh spokesman Ron Potesky.
    “We’re not concerned with what someone else may or may not
    do.”Xerox Corp. bought Global Imaging Systems for $1.67 billion
    last May to expand its small- and mid-sized business sales.
    Konica Minolta Holdings Inc. bought London-based Danka’s U.S.
    unit for $240 million in June.Ikon, the largest U.S. distributor of Canon and Ricoh
    copiers, is being advised by Goldman, Sachs & Co., while Morgan
    Stanley is advising Ricoh.