Product category:
General Print Supplies, Services for Printers
News Release from: Ricoh UK
Edited by the Printingtalk Editorial
Team on 26 January 2007
Deal Leads Ricoh To Acquire IBM Printing
Systems
Ricoh and IBM have formed a joint venture company based on IBM's Printing Systems Division as Ricoh strengthens its capabilities in output systems, including production printing.
Ricoh and IBM have formed a joint venture company based on IBM's Printing Systems Division as Ricoh strengthens its capabilities in output systems, including production printing On closing of the agreement between Ricoh and IBM, Ricoh initially will acquire 51 per cent of the joint venture, which will be called the Infoprint Solutions Company and will progressively acquire the remaining 49 per cent of the business over the next three years as the joint venture evolves in to a fully owned subsidiary of Ricoh
This article was originally published on Printingtalk on 13 May 2004 at 8.00am (UK)
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As consideration for the transaction, IBM will receive US$725 million in cash upon closing, which includes a management fee of US$35 million.
The cash received is consideration for the initial 51 per cent acquisition of the joint venture by Ricoh, as well as a prepayment for the remaining 49 per cent to be acquired and certain royalties and services to be provided by IBM to the Infoprint Solutions Company.
Final consideration for the 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.
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The initial transaction is planned to be completed in the second quarter of 2007, said Ricoh.
Samuel J Palmisano, IBM's chairman, president and chief executive officer, said: "IBM and Ricoh have both benefited from a strong relationship for many years and this agreement is a natural extension of that relationship.
In addition to its proven track record in the print industry, Ricoh will provide the investment necessary for the Infoprint Solutions Company to continue to innovate and grow, which will benefit current and future customers." And he added: "The eventual transfer of the IBM Printing Systems Division to Ricoh enables IBM to continue to refine its focus on its strategic businesses and the clients of those businesses." Masamitsu Sakurai, president and chief exectuive officer of Ricoh, commented: "This agreement is key to Ricoh's efforts to become a leading global provider of output and print systems.
We will invest the necessary resources to make Infoprint Solutions Company in to a core business.
Building on our long association with IBM, we look forward to creating an infrastructure that can address complex systems and mission critical environments." Pending regulatory clearance and after completion of local industrial relations information and consultation processes as appropriate, the Infoprint Solutions Company is expected to begin operations with about 1,200 employees, said Ricoh.
IBM will continue to provide maintenance services to Infoprint Solutions Company clients under a service agreement.
Over time, more than 1,000 IBM printer maintenance employees may join the new company.
This will depend on local business conditions and completion of local information and consultation processes.
Ricoh commented that Infoprint Solutions Company will combine IBM's 40 years of enterprise printing experience with Ricoh's office systems expertise, enabling the joint venture to become a prominent provider of output systems for customers of all sizes - from small businesses to large enterprises.
Drawing on the combined strengths of IBM and Ricoh, the Infoprint Solutions Company will be able to provide the best value through expanded research and development, a broader range of products and services, increased sales capabilities and a more comprehensive set of products, added the company.
It is claimed that the joint venture will benefit from access to IBM's worldwide distribution and sales network, as well as the continued use of IBM's Infoprint brand.
IBM client teams, business partners and dealers will continue to offer complete information technology systems, with the Infoprint Solutions Company as a worldwide partner for printers.
Ricoh added that IBM's printer development capabilities also will become part of the joint venture.
IBM Global Financing will continue as a financing provider for Infoprint Solutions Company as it provides the joint venture's clients and business partners with financial services.
IBM and Ricoh have been strategic partners for 20 years, collaborating on a number of products, including imaging technologies and production output systems.
Infoprint Solutions Company will harness those research and development capabilities in hardware, software and services and make a richer set of products available, commented Ricoh.
Infoprint Solutions Company's worldwide headquarters will be located in Boulder, Colorado (USA) currently the headquarters of the IBM Printing Systems Division.
The general manager of the IBM Printing Systems Division, Tony Romero, will head the new company as president and chief executive officer.
Until the closing of the agreement and implementation in countries, the IBM Printing Systems Division will maintain its current business operations.
There will be minimal charges associated with the transaction in the current quarter, said the company.
IBM's printing business generated approximately US$1 billion of revenue in 2006.
The total pre-tax gain anticipated by IBM on the transaction with Ricoh will be between US$175 million - US$275 million.
At closing, the pre-tax gain in that period is expected to be between US$100 million - US$150 million.
The balance of the anticipated gain will be recognised over the next three years as Ricoh acquires IBM's 49 per cent ownership in Infoprint Solutions Company.
The exact amount of the gain is not yet determinable and will be disclosed when the transaction closes and that information is available, added Ricoh.
The variables that will have an impact on the final gain include valuation of the final net assets to be transferred at closing, valuation of other agreements signed with the joint venture, transaction related expenses, and the operational performance of the joint venture.
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