DNK.L Regulatory News (DNK)

12 Oct 2006 07:15

Danka Business Systems PLC12 October 2006 Embargoed until 07.15am 12 October 2006 Danka Business Systems PLC ("Danka" or the "Company") Divestiture of European Businesses to Ricoh The Board of Danka announced today that it has entered into a Share PurchaseAgreement with Ricoh Europe B.V. ("Ricoh") pursuant to which the Company willsell its European businesses to Ricoh for a purchase price of U.S. $210 millionin cash, subject to certain adjustments, as described below. The completion ofthe transaction is expected to take place on or around December 31, 2006,subject to a number of conditions, as described below. A.D. Frazier, Danka's Chairman and Chief Executive Officer, said, "We arepleased that our long working relationship with Ricoh in Europe has led to thisimportant transaction. The sale to Ricoh of our mature and successfulEurope-based operations, which represents roughly half of our current totalsales and operating profit, is a major step forward in our previously announcedplan to release value through selected asset sales. The proceeds from the salewill help reduce indebtedness and enable us to focus on our U.S.-based businesswhere we believe the growth opportunities are substantial. "Additionally, we have retained the services of Houlihan Lokey Howard & ZukinCapital, Inc. and Skadden, Arps, Slate, Meagher & Flom LLP as independentadvisors to explore ways in which we may further strengthen our balance sheet togive us the financial flexibility to pursue our growth plans in the U.S. Withthe operational restructuring behind us, we will now make expansion andgrowth-oriented investments in our U.S.-based technology and people. We haverecently expanded our U.S. sales workforce by 8% and will continue to upgradeand add sales personnel, to better pursue U.S. market opportunities," concludedMr. Frazier. "Danka Europe possesses a direct and indirect sales and service network in majorEuropean countries. By acquiring Danka Europe, the Ricoh Group in Europe will beable to retain and expand its presence in Europe, and reinforce its sales andservice network. The Ricoh Group in Europe will further promote business in highvolume products, strengthen major account sales, and acquire further TotalDocument Volume," said Mr. Shiro "Simon" Sasaki, Chairman and CEO of Ricoh."Ricoh and Danka Europe have a long relationship in OEM under the Infotec brand,which is well acknowledged in the European market. Also, members of Danka Europehave a good knowledge of Ricoh products, and Ricoh is familiar with the cultureand business style of Danka, to enable easier synergy. By this acquisition, wewill be able to enhance value-added service to our customers in Europe." Transaction Description Under the terms of the agreement, Ricoh will pay Danka on completion of thetransaction the sum of U.S. $210 million in cash, subject to upwards or downwardnet asset adjustments to a maximum of U.S. $5 million. The target companies to be purchased by Ricoh are based in 12 countries in Western Europe: in the United Kingdom, Spain, France, Switzerland, Italy, Austria,Germany, Belgium, the Netherlands, Denmark, Sweden and Norway. These companiessell office equipment, the majority of which is manufactured by affiliates ofRicoh, and provide after sales services and supplies. Ricoh will also purchase Danka Office Products BV, Danka's dealer channel in Europe. In the year ended 31 March 2006, Danka's European businesses generated revenuesof U.S. $523.7 million and operating profit of U.S. $8.7 million (excludingrestructure charges and foreign currency impacts) and their gross assets wereU.S. $214.6 million. The closing of the transaction will be subject to a number of conditions,including the obtaining of requisite competition approvals and Danka shareholderapproval. Further details of the transaction, including the time and location ofthe extraordinary general meeting, will be set out in a circular to be sent toshareholders in due course. Danka Use of Proceeds The net proceeds received by Danka from the transaction will be used to reducethe Company's indebtedness and improve its working capital. The proposed sale to Ricoh of the Danka European businesses will enablemanagement to focus on developing and improving Danka's business in the U.S. About Danka Danka is one of the largest independent suppliers of office imaging systems. For30 years Danka has provided its customers with the equipment, supplies, softwareand integrated services and support they need to address their print, copy anddocument workflow requirements. Danka delivers these comprehensive documentsolutions through a consultative model designed to improve business processes,reduce costs and increase productivity that drives customer value andsatisfaction. Danka services customers directly in 50 U.S. markets and in 12European countries, as well as indirectly through an established dealeroperation in Europe. For more information, visit Danka at www.danka.com. About Ricoh Ricoh is the European headquarters of Ricoh Company Ltd., a leading globalmanufacturer of office equipment, located in Amstelveen, the Netherlands. It isresponsible for marketing, sales and service of Ricoh products in Europe, theMiddle East and Africa. In Europe, Ricoh has three manufacturing sites: two atRicoh UK Products Ltd. Telford, UK; GR Advanced Materials Ltd., Stirling, UK;and Ricoh Industrie France S.A., Colmar, France. In addition, the Ricoh EuropeanGroup comprises sales subsidiaries and affiliates in 21 countries. In the fiscalyear ended March 31, 2006, revenues from Ricoh's European operations totalledover €3.15 billion, accounting for 22.7% of Ricoh Company Ltd.'s globalrevenues. Ricoh Company Ltd.'s worldwide sales increased by 5.6% totallingY1,915 billion (€13.9 billion). Enquiries The Dilenschneider Group (New York)Mona J. Walsh, +1 212 922 0900 Weber Shandwick Square Mile (London)Helen Thomas, +44 (0)20 7067 0700 Evolution Securities Limited (London)(Sponsor to Danka Business Systems PLC)Bobbie Hilliam, +44 (0)20 7071 4300 Evolution Securities Limited ("Evolution Securities"), which is authorised inthe United Kingdom by the Financial Services Authority, is acting as Sponsor toDanka Business Systems PLC and no-one else in connection with the Transactionand will not be responsible to anyone other than the Company for providing theprotections afforded to customers of Evolution Securities or for advising anyother person in connection with the Transaction. This announcement is not intended to and does not constitute, or form any partof, an offer to sell or an invitation to purchase any securities or thesolicitation of any vote or approval in any jurisdiction pursuant to theTransaction or otherwise. Persons who are not resident in the United Kingdom, orwho are subject to the laws of any jurisdiction other than the United Kingdom,should inform themselves about, and observe, any applicable legal and regulatoryrequirements. This information is provided by RNS The company news service from the London Stock Exchange