Ricoh and IBM have formed of a joint venture company based on IBM's Printing Systems Division. Ricoh initially will acquire 51% of the joint venture, which will be called the InfoPrint Solutions Company and will progressively acquire the remaining 49% over the next three years as the joint venture evolves into a fully-owned subsidiary of Ricoh.
As consideration for the transaction, IBM will receive $725-million in cash upon closing, which includes a management fee of $35-million. The cash received is consideration for the initial 51% acquisition of the joint venture by Ricoh as well as a prepayment for the remaining 49% to be acquired and certain royalties and services to be provided by IBM to the 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. The initial transaction is planned to be completed in the second quarter of 2007.
"IBM and Ricoh have both benefited from a strong relationship for many years, and this agreement is a natural extension of that relationship," says Samuel Palmisano, IBM chairman, president and CEO.
"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. 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 CEO of Ricoh, adds: "This agreement is key to Ricoh's efforts to become a leading global provider of output and print solutions.
"We will invest the necessary resources to make InfoPrint Solutions Company into a core business. Building on our long association with IBM, we look forward to creating an infrastructure that can address complex solutions 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. 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 specialists may join the new company.
This will depend on local business conditions and completion of local information and consultation processes.