Canon Says Little Regarding RiKON

In response to the sale of its largest distributor, a Canon executive finally commented on the sale of IKON.

Off the Print4Pay Hotel site -

Canon’s managing director, Masaki Nakaoka, stated; “The acquisition (of IKON) will trigger a further reshuffle of sales agents for us and others. We will now aim to expand our sales network.”

Ricoh reported that if the acquisition of IKON falls through:

• IKON will pay Ricoh a termination fee of $66.7 million
• IKON will also pay $16 million to reimburse Ricoh for legal fees.
  

According to some reports, on 9/16/08, IKON conducted a conference call notifying its employees that Canon would cut off IKON from acquiring any new hardware inventory as soon as the Ricoh acquisition is finalized. IKON will however, still have access to Canon parts and supplies.

Because Ricoh does not offer high end production print equipment (as Canon did with imagePRESS color and imageRUNNER PRO relabeled Kodak b/w units), IKON may be in discussions with Xerox to market some of their equipment.

More details on what makes up IKON:

• Original company founded in 1928
• Formally incorporated in 1952
• Revenue peaked in 1996 at $11 billion
• Unisource, the paper distribution business, was spun off in 1996
• Has currently completed only 2/3’s of its “One Platform Conversion” program
• Copier division revenue peaked in 1998 at $5.5 billion
• Stock value peaked in 1996 at $65 per share, but declined to as low as $2.50 per share
• Has total of 24,000 employees in 400 office locations
• Canada & Europe account for 18% of revenue
• 6000 technicians
• 9000 are FM or professional services employees
• 500 work in the HQ located in Malvern, PA
• Has 500,000 customers
• Has 900,000 devices in field under service contract
• GE Capital provides most of leasing
• Includes 100 of the Fortune 500
• Sales and service of copiers accounts for 75% of business
• 50% of revenue comes from color and production print systems
• 20% was from professional services or FM
• B/W copier sales were declining by 7%
• 8% of service revenue was coming from color clicks

In contrast, when Xerox bought Global, it acquired 200 offices and 200,000 customers for $1.5 billion
--------------

My reflections on the above:

• Canon is not going to bid for Ikon.
• Canon is out there expanding the "sales network" through purchasing some of the remaining independents.
• Ricoh may take a while to digest IKON but I do not think they will "choke" on IKON.
• We may see new product from RiKON as early as Q1, 2009 to fill the gaps in the product line or even see some short term partnerships with the likes of Xerox and Kodak.