Steel Group Rumored to Have "Forced" IKON Sale

From an article at Philly.com:

"...This is all driven by Steel Partners. They're one of the most aggressive hedge funds in the world, with $9 billion in assets under management," said Park. "They've been really public, and this is no real surprise," he added. "They're the largest shareholder. They own about 10 percent at a cost of about $10.51." Steel pushed Ikon last year to buy back shares at $17.50; Ikon balked, paying up to $15 in a limited buyback that boosted the company's debt."

And off of the author's blog -

"As of June 30, 2008, Steel owned 12,456,300 shares at an average cost of $10.51/share.

Assuming the deal goes through, Steel will realize a hefty $84M gain on their four year investment.

Steel began pressuring IKN in June 2007 to do a $850M share buyback at $17.50/share. After Steel announced their intention to obtain board representation, IKN announced (in November 2007) a $500M buyback - which included a $295M dutch auction between $13 and $15/share and the balance to be purchased on the open market over the next year or so. As a result, Steel signed a standstill agreement and agreed not to seek board representation through 2009..."

My previous post on Steele:

IKON and Steel Partners - How IKON Will Be Sold

IKON, Ricoh - with the possibility of ANOTHER BIDDER?

there is an "undertone" out there - is there another bidder willing to go after IKON?

From Dividends.com, "...This acquisition continues a trend we have been seeing, in which office equipment makers have been acquiring distributors to strengthen their sales channels and product offerings. Ikon has 400 sales and services mainly in Europe and the U.S. Ricoh had recently acquired the European operations of copier service and supply company Danka Business Systems.

This is a solid offer in place, but we have added the shares of Ikon Office Solutions to our recommended list, as the possibility of another bidder jumping into the fray is a possibility. The company has a dividend yield of 1.03%, based on Tuesday's closing stock price of $15.56..."

In addition to this being the biggest move in the industry - ever - it could get even more delicious.

Words From IKON's Espe - Internal IKON Memo

Memo to the crew, from Espe...

"Today we announced the exciting news that IKON is to be acquired by Ricoh Company, Ltd., subject to the satisfaction of customary closing conditions. A copy of the press release we issued is attached for your information. As you know, Ricoh has been one of our valued equipment partners for many years and we are thrilled that we will now be joining forces with them to create a stronger global office solutions competitor.

Let me explain why we chose to take this important step. As our Board and management looked at the future of our company, we focused on how going forward we could best meet our customers’ needs, deliver value to our shareholders and create opportunities for our employees. We decided that, like many of our competitors, we would be better able to achieve these goals as part of a larger organization that was able to offer a full range of end-to-end office solutions and services to more customers across the globe.

We believe that as part of a combined company in the highly competitive and evolving office equipment industry, we can leverage our sales, service and marketing depth with Ricoh’s engineering and manufacturing expertise to better understand and more rapidly respond to the needs of our customers. In addition, we anticipate that this transaction will create new opportunities for our employees, as you will be working for a larger organization with enhanced growth prospects.

The unmatched expertise and strong skills of IKON’s people were a significant reason why Ricoh wanted to acquire IKON and they are very much looking forward to working with our team.

Following the completion of the transaction, Ricoh intends to operate IKON as an independent subsidiary and has no immediate plans to merge or consolidate the organizations or to make any changes as a result of this transaction. Of course, we will remain committed to serving all our customers and we have every intention of continuing to provide them with world-class service and support, regardless of the equipment they use.

While we are very excited about today’s news, it is important for you to know that it will take several months to complete this transaction. In the meantime, it will be business as usual for us. We anticipate that the transaction will close before the end of calendar year 2008. From now until then, it is critical that we all stay focused on selling, servicing and meeting the needs of our customers, and achieving our objectives to finish the fiscal year strong...

...I’d like to end by thanking you for your continued hard work and dedication to IKON. It is your contributions that have made our company an attractive partner for Ricoh and I am confident that if we all can continue to focus on what we do best, we will all have a very bright future to look forward to as part of the new Ricoh.

Matt"

Here is the Press Release.

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