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IBM, Ricoh strike printing systems deal

Ricoh to pay $725 million in joint venture, eventually assume full ownership of IBM's Printing Systems Division.

IBM is transferring its Printing Systems Division to Japanese electronics company Ricoh as part of a joint-venture agreement, the companies announced Thursday.

Ricoh and IBM are forming a new company, called InfoPrint Solutions, based on IBM's Printing Systems Division. Complete ownership of InfoPrint Solutions will be transferred to Ricoh over three years.

Under the terms of the deal, IBM will receive $725 million in cash from . That amount includes a $35 million management fee, for which IBM will provide specific royalties and maintenance services to InfoPrint over the three-year period.

Ricoh will acquire 51 percent of InfoPrint at the close of the transaction, which is expected by the second quarter 2007, and the remaining 49 percent over the next three years. A second review of the transaction, taking into account profits and losses, will also take place at the end of the transfer period. InfoPrint will then become a wholly owned subsidiary of Ricoh, according to the announcement.

"This agreement is key to Ricoh's efforts to become a leading global provider of output and print solutions. We will invest the necessary resources to make InfoPrint Solutions Company into a core business," Ricoh CEO Masamitsu Sakurai said in a statement.

Pending regulatory clearance, InfoPrint is expected to open with 1,200 employees. Tony Romero, the current general manager of IBM Printing Systems Division, will become the president and CEO of InfoPrint.

More than 1,000 IBM maintenance service specialists may also join InfoPrint as employees over time, according to the companies. The headquarters for InfoPrint will be in Boulder, Colo., the current headquarters of IBM's Printing Systems Division, and IBM Global Financing will remain a financing provider for InfoPrint.