Merger Watch: IKON Office Solutions - Ricoh Company

Based on initial research, the  looks to be a fairly straightforward transaction with respect to competition-related regulatory issues. It is fairly clear that IKN is primarily a document management entity, while Ricoh is essentially a supplier of the materials/equipment IKN implements in its service offerings. This is stated quite clearly in IKN's brief competition description from its annual report:

We provide substantially similar products and services and compete directly against companies such as Xerox, Pitney Bowes, Océ Imagistics, and Danka. We also compete against certain of our significant suppliers, such as Canon, Ricoh, Konica Minolta, and HP. In addition, we compete against smaller local independent office equipment distributors.

Note above that IKN lists as its primary direct competitors Xerox (XRX) and Pitney Bowes (PBI), and other major players, such as Canon (CAJ) and HP (HPQ) as indirect competitors, along with Ricoh. The names alone suggest more than ample competition on any broad or niche product segment IKN could possibly provide.

Below are two U.S. government contracting market share charts (c. 2003) which illustrate both the different segments of operations and competitive environments in which these companies are involved. In the first chart, IKN ranks far below its acknowledged competitors in the "Office Machines" segment:

In essences, this is a vertical move by Ricoh to compliment its vast equipment lines with a major document management operation. This factor, along with the obviously intense competition in this field, virtually guarantee swift regulatory approvals in the U.S. and Europe.

Ricoh should have no difficulty completing this transaction in a 90- to 100-day time frame, assuming the first proxy statement is filed before the end of next month.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.