IBM offloads printing business to Ricoh

IBM announced today that it is effectively offloading its printing division to Ricoh through the formation of a joint venture company.

Under the terms of the agreement, Ricoh will initially acquire 51 per cent of the joint venture, which is based on IBM's Printing Systems Division. The new firm will be called the InfoPrint Solutions Company.

Ricoh will then progressively acquire the remaining 49 per cent over the next three years as the joint venture evolves into a fully owned subsidiary of Ricoh.

"IBM and Ricoh have both benefited from a strong relationship for many years, and this agreement is a natural extension of that relationship," said Sam Palmisano, chairman, president and chief executive at IBM.

"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."

IBM will receive $725m in cash for its part in the transaction on closing, which includes a management fee of $35m.

The cash is in recognition of the initial 51 per cent acquisition of the joint venture by Ricoh, as well as a prepayment for the remaining 49 per cent to be acquired and "certain royalties and services" to be provided by IBM.

Final consideration for the transaction will be determined at the end of the three-year period based on 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.

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, Big Blue said that it expects more than 1,000 IBM printer maintenance specialists to join the new company.

InfoPrint Solutions Company's worldwide headquarters will be in Boulder, Colorado, currently the headquarters of the IBM Printing Systems Division.

Tony Romero, general manager of the IBM Printing Systems Division, will head the new company as president and chief executive.