China in auto power play
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Ricoh shares up on Ikon acquisition, Canon slides
TOKYO (Reuters) - Shares of copier and printer maker Ricoh Co Ltd (7752.T) jumped nearly 4 percent on its $1.6 billion acquisition of U.S. distributor Ikon Office Solutions IKN.N, while rival Canon Inc (7751.T) slid to a four-month low on concerns the deal would hurt its business.
Ricoh, which competes with Xerox Corp (XRX.N), Canon and Konica Minolta Holdings (4902.T), said on Wednesday it would acquire Ikon to help it gain customers in Europe and the United States, a key market. ID:nT32166
Canon machines represent 60 percent of the products Ikon handles at the moment, with Ricoh machines accounting for 30 percent. But Ricoh said it aims to replace Canon products with its own printers and copiers in three to four years.
Analysts said the move could be a major blow for Canon in the world's largest office equipment market.
"Canon is now at risk of losing half of its copier sales in North America," UBS analyst Yoshitsugu Yamamoto wrote in a note to clients.
Shares of Ricoh were up 3.8 percent at 1,792 yen as of the midday break while Canon dropped 4.2 percent to 4,840 yen, becoming the biggest drag on the benchmark Nikkei average .N225, which was up 0.1 percent.
Earlier Canon slid to a 4-month low of 4,770 yen.
Office equipment makers have been snapping up distributors to strengthen their sales channels and product offerings.
Xerox bought Global Imaging Systems for $1.5 billion in May 2007, while Konica earlier this year clinched a deal for Danka Business Systems' DNK.L U.S. unit.
Ricoh's deal will likely help it expand its market share in the United States, although it could face some challenges in retaining Ikon's customers and employees, analysts said.
Ikon is the world's largest independent distributor of office equipment with more than 400 sales and service locations, mainly in Europe and the United States.
"We think this move by Ricoh, to make the largest-ever acquisition during a period of global economic stagnation, represents a positive surprise from the standpoint of aggressive management," JP Morgan analyst Hisahi Moriyama said in a note.
(Editing by Sophie Hardach)
