Boulder is gaining a new corporate headquarters as IBM agreed today to sell off its printing systems division to Ricoh Co., Japan’s second-largest printing office equipment maker for $725 million.
The deal will be a joint venture between IBM and Ricoh, resulting in the formation of a new company, InfoPrint Solutions. Ricoh initially will acquire 51 percent of the joint venture, and will acquire the remaining 49 percent over the next three years as the joint venture evolves into a fully owned subsidiary of Ricoh, said IBM in a statement.
IBM’s commercial printing division is already based in Boulder and employs about 500. Armonk, N.Y.-based IBM has about 4,000 employees on its Boulder campus. IBM is the largest technology employer in Colorado with more than 5,500 employees. None of the workers in Boulder will be affected by the transition, said IBM spokesman Jay Cadmus.
The purchase will help Ricoh broaden its range of office equipment products to compete with Xerox Corp. and Canon Inc. IBM Chief Executive Officer Sam Palmisano has shed hardware units, including the personal-computer business, to focus on more profitable areas such as software.
“Ricoh had to find another business area to continue its growth, and digital printing is a good solution,” said Tetsuya Wadaki, an analyst at Nomura Securities Co. in Tokyo. “Ricoh will be able to reach a larger customer base with this acquisition and there will be a ripple effect in its existing business.” Wadaki has a “buy” recommendation on Ricoh stock.
This is IBM’s biggest sale since the PC transaction. The company has replaced hardware units such as that with software operations, purchasing more than 10 companies last year to make that business its fastest-growing. The software unit’s sales rose 15 percent in the latest quarter, compared with 4.3 percent for hardware.
IBM expects a pretax gain of $175 million to $275 million from the sale. The business had annual sales of about $1 billion, accounting for about 1 percent of IBM’s total 2006 revenue of $91.4 billion.
Ricoh had sales of $16.4 billion in its latest fiscal year.
InfoPrint will initially have about 1,200 workers, IBM said, and later on more than 1,000 IBM printer maintenance workers may join the venture. The companies plan to close the initial sale in the second quarter of 2007.
Bloomberg News contributed to this report.
