Ricoh Buys IKON, Weak Construction

123jump.com Staff
28 Aug, 2008
New York City

Stocks in Japan edged higher lifted by rising commodities related stocks and news of acquisition from Ricoh. The office equipment company agreed to acquire IKON Office Solutions for $1.6 billion in cash, 33% premium from its 60-day trailing average price. More construction companies and home builders in Japan are expected falter in the rest of the year. July month saw nearly 1,140 bankruptcies in Japan, with nearly third of them from the construction industry.

[R]5:00AM New York, 7:00PM Tokyo - Ricoh to acquire IKON Office Solutions for $1.6 billion. More construction related companies are expected to fail.[/R]

Japan market indexes rose marginally despite expectations of more failures of real estate companies this year. Ricoh acquires IKON Office Solutions for $1.6 billion in cash.

Market Sentiment

In Tokyo trading Nikkei 225 rose 0.12% or 15.29 to 12,768.25, and the broader Topix Index fell 0.3% or 4.16 to 1,219.53.

In the first section of the Tokyo Stock Exchange 6.8 billion shares worth 709 billion yen were traded and in the second section 177 million shares worth 2 billion yen changed hands.

Of the Nikkei 225 stocks 105 rose, 109 declined, and 11 were unchanged. Clarion Co. Ltd led advancers in the index shares with a rise of 4.67% followed by UNY gaining 3.99%.

IKON to acquire Ricoh for $1.6 billion in Cash

IKON Office Solutions reported on its Web site today that it has signed an agreement with Ricoh Company Ltd. for the latter to acquire the company for $17.25 per share, or approximately $1.6 billion in cash. Ricoh will finance the transaction with both internal and external funding.

The offer represents a 33% premium over IKON’s trailing 60-day average stock price as of market close on August 26th and will enable the company to strengthen its offerings to customers and create new opportunities for the employees.

The transaction is subject to regulatory approvals in the U.S., Canada and Europe, customary closing conditions and IKON shareholder approval.

Failures of Real Estate Companies to Rise

Bloomberg News reported on its Web site today that chairman of Daiwa Securities Takeo Higuchi said the failure of Japanese real estate companies will grow this year due to restrictive lending conditions by financial institutions.

The financial position of Japan’s property developers has deteriorated precipitously, with developers and construction companies accounting for a third of the 1,131 bankruptcies in July.

Credit Suisse said recently new lending to the real estate sector fell by 18.7% in the three months to June this year.

Shares of Sohken Homes Co. were suspended from trading yesterday after the company filed for bankruptcy with the Tokyo District Court and declared total liabilities of 33.8 billion yen.

Last month, condominium developer Zephyr Co and Suruga Corp filed for court-led rehabilitation with debts of 95 billion yen and 62 billion yen respectively.

Mitsubishi UFJ to Raise Stake in Acom to 40%

The Nikkei News reported on its Web site today that Mitsubishi UFJ Financial Group plans to make Acom a consolidated subsidiary by increasing its stake in the company from 15% to 40% through a tender offer beginning next month.

Mitsubishi UFJ is expected to spend 140 billion yen to increase its stake in the consumer lender. The financial group however said in a statement on its Web site that it hasn’t made a decision yet.

Gainers & Losers

Clarion Co. Ltd led advancers in the Nikkei 225 index shares with a rise of 4.67% followed by rises in UNY Co. Ltd. of 3.99%, in Obayashi Corp. of 3.96%, in Kyowa Hakko Kog of 3.91%, and Advantest Corp. of 3.32%.

Ricoh Co. also edged up 2.90% after its agreement to acquire IKON.

GS Yuasa Corp. led decliners in the Nikkei 225 index shares with a fall of 5.74% followed by losses in Heiwa Real Estate of 5.27%, in Chiyoda Corp. of 5.26%, in Canon Inc. of 5.15%, and NGK Insulators of 3.78%.