Ricoh to buy Malvern's Ikon Office Solutions

Ricoh Co. Ltd., a Japanese manufacturer of printers and photocopiers, has agreed to buy Ikon Office Solutions Inc., of Malvern, for $1.6 billion.

The deal, announced yesterday, fits with the trend of copier manufacturers' buying distributors of their products to get closer to customers.

The proposed sale marks a major turning point for Ikon, which traces its roots to the former Alco Standard Corp., a classic 1960s conglomerate, whose spin-offs include drug wholesaler AmerisourceBergen Corp., of Chesterbrook, and aerospace manufacturer Triumph Group Inc., of Wayne.

Ikon's chairman and chief executive officer, Matthew J. Espe, said the deal with Ricoh culminated six years of work streamlining Ikon - built through 450 acquisitions in the 1980s and 1990s - from a bloated giant into a more efficient, financially stronger company.

"We needed to transform what had become a broken holding company in the late '90s into an integrated operating company," Espe said.

If Ikon shareholders approve the sale, Ricoh, of Tokyo, will pay $17.25 a share in cash, 51 percent more than the average close of Ikon shares over the last 12 months.

Ikon officials said the company would operate as a subsidiary and keep its headquarters in Malvern, where it employs 500. In the Philadelphia region, Ikon employs about 1,000.

"We don't anticipate any change in jobs as a result of this transaction," said Daniel Murphy, Ikon's vice president of global strategy and communications.

Ikon is the second Philadelphia-area company to agree to a buyout by a Japanese firm this summer. Last month, Bala Cynwyd insurer Philadelphia Consolidated Holding Corp. said it was selling out to Tokio Marine Holdings Inc. for $4.4 billion in cash.

So far this year, Japanese companies have spent $11.6 billion buying U.S. companies, up from $2.6 billion in the same period a year earlier, even though the number of deals was about the same, according to financial data supplied by Thomson Reuters. Overall, Thomson Reuters said, the global value of mergers and acquisitions is down 35 percent this year.

Driven in part by the weak dollar, which makes U.S. properties cheaper, foreign buyers are busier in the U.S. market than last year. They have captured a third of the deals in the United States this year, compared with 21 percent in 2007.

Henry Nassau, cochairman of the Philadelphia law firm Dechert L.L.P.'s corporate and securities group, said the surge in cross-border deals was not surprising given the exchange rates and slowing growth. Plus, he said, "we see more and more businesses operating on a global basis."

Buying Ikon allows Ricoh to extend its reach into markets in Canada, Europe and the United States, where Ikon helps companies such as Hallmark Cards Inc., Union Pacific Corp. and Hanesbrands Inc. manage documents.

Ikon already distributes about 30 percent of Ricoh's sales in North America and is even more important to Ricoh competitor Canon Inc., handling just under 40 percent of Canon's sales in North America, Murphy said.

Murphy said Ikon expected to continue doing business with Ricoh's competitors. A spokesman at Canon U.S.A. Inc., of New York, did not return a call seeking comment. Asked how Ikon could recommend a Canon product over one by Ricoh when it is owned by Ricoh, Espe said: "It's about doing what's right for the customer."

Canon has a subsidiary based in Mount Laurel, Canon Business Solutions Inc., that competes with Ikon.

Earlier this year, Konica Minolta Holdings Inc., a supplier to Ikon, bought distributor Danka Business Systems P.L.C. Xerox Corp. bought distributor Global Imaging Systems Inc. in 2007 and has been building that service business through acquisitions.

Being the last large, independent distributor "increased our value to the manufacturers," Murphy said.