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Thursday, August 28, 2008

Steel Partners - Dark Forces behind the IKON/Ricoh Deal

Lichtenstein Gets His Wish With Ikon Deal

Last year, Steel Partners offered IKON the opportunity to buy back all of Steele's IKON shares at a price of $17.25. At the time, IKON offered to buy the shares at $15/share, Steele declined and held on to IKON.

With yesterday's announced deal (Ricoh to Buy IKON - Shot Heard Around the World), Ricoh will purchase IKON for $17.25 per stock.

From the New York Times, Thursday August 28, 2008 -

"...The Philadelphia Inquirer noted that the activist investor’s hedge fund Steel Partners, which counts Ikon as one of its largest holdings, has been pressuring the company to boost shareholder value for some time now. Last year, Steel Partners urged Ikon to buy back share at a price of $17.25. The company declined, but offered $15 per share instead.

Steel Partners, however, decided to hang onto its holding and is now seeing its shares going for $17.25, under the terms of the deal with Japan’s Ricoh, which competes with Xerox, Canon and Konica Minolta Holdings in printers and copiers. The buyout price is a premium of 11 percent over Tuesday’s close of $15.56..."

Of course, IKON spokes-holes continue to say
that the deal was a result of the company’s “strategic planning process” and industry consolidation, and “had nothing to do with” the activist investor’s involvement.

One industry observer notes,
“This is all driven by Steel Partners. They’re one of the most aggressive hedge funds in the world,”

- Damien J. Park, owner of Philadelphia shareholder- management consultant Hedge Fund Solutions, told The Inquirer. Steel Partners owns about one-eighth of Ikon, and paid about $10.50 a share, for a $6.75-a-share profit.
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Interesting backdrop -

November 21, 2007:
"...Ikon agreed in October to provide Steel Partners with confidential information in exchange for the New York fund's agreeing to not try to take over Ikon or its board of directors for six months. Steel said in November that it supported Ikon's $500 million buyback plan, which included a $295 million modified Dutch auction tender offer that Ikon completed in December..."
In exchange for the "confidential information" Steel Partners agreed ""to refrain from taking certain actions with respect to its investment in Ikon through May 2009, subject to completion of the pending repurchase plan."
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Well, the "pending repurchase plan" was never completed.

March, 2008 -

"Ikon Office Solutions Inc. said Monday it no longer intends to repurchase $500 million of its stock in its 2008 fiscal year, which ends Sept. 30, and expects to end the year having bought back $340 million in shares. "We remain committed to completing our $500 million share repurchase program," Ikon Chairman, President and CEO Matthew J. Espe said. "However, in light of the challenging credit markets and the anticipated one-time cash and pre-tax charge ... we believe refinancing our existing debt would be significantly dilutive to our fiscal year 2008 results at this time."
The provider of copiers, related office equipment and document management services said the decision means its agreement with shareholder Steel Partners II LP probably will expire at the end of the month..."
...very interesting...

I posted this, last month:

Excerpts From Espe




Wednesday, August 27, 2008

Fallout - Ricoh Rises, Canon Falls

Ricoh Shares Advance on Purchase of Ikon; Canon Falls

Aug. 28 (Bloomberg) -- Ricoh Co., Japan's second-largest office-equipment maker, rose the most in more than five months in Tokyo trading on speculation acquiring Ikon Office Solutions Inc. will help the company take U.S. market share from Canon Inc.

Ricoh added 6.4 percent to 1,838 yen at 9:43 a.m. on the Tokyo Stock Exchange, the biggest gain since March 19. Canon lost 4.2 percent to 4,840 yen, losing the most since July 25.

"Ikon, Unisource have similar growth plans" - 1997

Has it really been 11 years?

I ran across this article today, "
Ikon, Unisource have similar growth plans" from the Philadelphia Business Journal - by Bob Brooke

"When Alco Standard Corp. of Valley Forge split in two to form Ikon Office Solutions Inc. and Unisource Worldwide Inc. on New Year's Eve, the move culminated a long-planned move to give its two main business units much needed freedom.

And in some respects, the spinoff can be seen as simply a civilized business transaction between two gentlemen -- Ikon Chief Executive Officer John Stuart and Ray Mundt, Unisource's CEO.

For years, the giant company, built on office copiers and paper, had been replicating itself through hundreds of acquisitions across the country. Alco began to take shape in the 1960s when Tinkham Veale, a wealthy Cleveland investor, assembled dozens of firms that included companies in fertilizer, machinery, electronics, coal and ice cream. In 1984, Alco sold off its manufacturing companies and focused on distribution, including its paper business, Paper Corporation of America. "

Stuart, having worked for Ricoh Corp., IBM and Royal Business Machines, joined the company in 1985 to restructure its office-products division...
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The article is a trip. A trip down memory lane. This one line stumbled me up,



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Greg Walters, Incorporated
greg@grwalters.com
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