Friday, August 29, 2008

Ricoh to buy IKON

Ricoh, the Japanese copier company (on of the top three in the world) announced it would buy US office-machine dealer IKON Office Solutions. The deal is for $1.6 billion. IKON is the largest U.S. independent dealer (400 locations) and is currently a major reseller of Ricoh’s copiers and printers (it sells over 20% of them). IKON is also a major reseller for Ricoh rivals Canon, Hewlett-Packard, and OcĂ©.

The buyout is the third in a series of purchases, where major copier companies have bought out independent US dealer chains. In April 2007 , Xerox announced the purchase of Global Imaging ($1.5 billion). In April 2008, Konica Minolta announced it would buy Danka Office Imaging ($240 million). If the IKON deal goes through, there will be no more major dealer chains, though there are still plenty of smaller dealers.

The structure of the copier/office equipment industry has been much like that of the auto industry, where only the largest customers bought directly from the manufacturers, That has changed in the copier industry over the years, as corporate sales divisions compete more and more with local dealers, especially at national accounts, the cream of the business. The IKON move is an emphatic acceleration of that process.

The interesting question is what Canon will do? IKON sells around 40% of Canon copiers currently. Canon seems to have lost a game of musical chairs, and it will be forced to build even more its own internal national sales efforts in the US. The squeeze is on for small and mid-size dealers.