Ricoh to Buy Lanier for $911 Million in Cash, Debt (Update7)
11/29/00 11:16:00 PM
Source: Bloomberg News
(Adds Ricoh director quote and details in fifth paragraph; adds background on Canon and Xerox in graphs six through eight.)
Tokyo, Nov. 30 (Bloomberg) -- Ricoh Co., Japan's second- biggest office equipment maker, agreed to buy Atlanta-based Lanier Worldwide Inc. for $911 million in cash and assumed debt in a bid to boost its share of the world's largest copier market.
Ricoh said it will make a tender offer to buy all 85 million shares of the U.S. office equipment distributor for $3 each, more than five times the company's closing price Wednesday of 56 cents. Ricoh also will assume $651 million in Lanier debt, said a spokesman for the Japanese company.
The purchase will allow Ricoh to expand in the U.S., where rivals Xerox Corp. and Canon Inc. dominate the market. Xerox, the world leader in copiers, has been stumbling, and Ricoh has an opportunity to use Lanier's distribution system to gain ground, a stock analyst said.
''Ricoh is a distant third (by market share) in the U.S. and will use this purchase to catch up with Canon and Xerox,'' said Makoto Sakurai, an analyst with Marusan Securities Co. who rates Ricoh a ''buy.''
Grabbing U.S. Market Share
Ricoh plans to phase out Lanier's distribution of other copier makers' products. Ricoh will use the Atlanta company's sales force and outlets to build its U.S. market share ''by several percentage points over several years,'' said Tatsuo Hirakawa, an executive managing director with the company.
Xerox and Canon each have about an 18 percent share of the U.S. copier market, while Ricoh has a 14 percent share, Hirakawa said.
Xerox's profits and share price have plummeted amid fierce competition and changes in management. It plans to sell as much as $4 billion worth of assets and to cut $1 billion in costs in the next year.
Canon, Japan's biggest office equipment maker, introduced a new low-priced copier in the U.S. in August in a bid to grab more market share. The company has posted increasing profits on strong sales of digital cameras and chipmaking equipment.
The U.S. is Ricoh's biggest foreign market, accounting for 15 percent of its 1.4 trillion yen ($12.6 billion) in annual sales, said Takunobu Matsutani, a company spokesman.
Lanier's Struggles
Lanier distributes copiers, printers and other office equipment from 1,600 locations worldwide. Its profits have tumbled in the competitive U.S. market, but management has taken steps to improve its position, an analyst for a Lanier shareholder said.
''We won the lottery,'' said Uzi Zimmerman, a research analyst with JMG Capital Partners L.P., which bought 25,000 Lanier shares in August. ''The industry looked bleak, and other companies around them were bleeding. (Lanier's) management was chipping away at their debt and putting in cost controls.''
Lanier last month reported an 87 percent decline in fiscal first-quarter income, to $1.3 million, or 2 cents a share, from $9.7 million a year earlier. Sales fell 9.2 percent to $288.7 million.
Lanier shares have lost 85 percent of their market value this year. They traded at a 52-week high of $4.81 a year ago.
Sales Rebound?
''Compared to Lanier's past share price, $3 a share is cheap, and if you add into that its contribution to sales, I think it's a good purchase,'' said Sakurai, the Marusan analyst. He said he expects Lanier's sales to rebound under Ricoh.
Ricoh said it will start its tender offer Dec. 13 and expects to complete the purchase within 20 days. It said it expects to buy additional shares through options exercised by Lanier employees.
Ricoh shares rose 29 yen, or 1.5 percent, to 1,969 yen. |
