ST. PETERSBURG — A legendary but long-beleaguered Tampa Bay area corporation is about to pass into oblivion. With some luck, however, many of its workers may wind up with a stronger boss.
Danka Office Imaging Co., which has been selling and servicing office imaging equipment for more than 30 years, is being acquired by one of its biggest suppliers, Konica Minolta Business Solutions USA Inc., based in Ramsey, N.J.
The price tag: $240-million.
The buyer, a subsidiary of the giant Japanese corporation Konica Minolta Holdings, said Tuesday that it will maintain Danka's headquarters in St. Petersburg, plus other offices, with the company operating as an independent subsidiary. About 300 of Danka's 2,000 employees are in the Tampa Bay area. Danka's parent company in London will be liquidated upon completion of the deal by midyear.
A spokeswoman for Konica, which competes with Xerox, Canon and Ricoh in the fast-changing office printer, copier and fax world, said the deal reflects a trend in the industry.
"There has been thoughtful consolidation in the market," spokeswoman Doreen Maciak said. "We've been working with Danka for a long time, so it's good for Danka and a great move for Konica Minolta."
A.D. Frazier, who has been wrestling with Danka's crippling debt since taking over as chairman and chief executive two years ago, said it is premature to speculate on how many positions might be pared in the merger.
"It's a good thing for the employees of Danka," said Frazier, who will leave after the deal closes. "They'll have the financial strength of a world-class copier company behind them. I expect great things from them."
Danka posted $450-million in revenue for the fiscal year ended March 31, 2007.
Danka's major creditor, GE Corporate Capital, will be the biggest beneficiary of the sale. It will receive $152-million of the proceeds, with much of the rest going to preferred shareholders. Cypress Merchant Banking Partners, a private-equity group in New York, is Danka's largest voting shareholder, with $372-million in accrued payments owed. It is expected to get less than 20 percent of that amount through the sale, yet Cypress has voted in favor of the transaction.
Investors who hold Danka's common stock, known in the United States as American Depository Shares, may receive 10 cents a share, pending special arrangements. The stock, which was delisted from the Nasdaq last year and now trades over the counter, last traded in mid December for 24 cents a share. Over the past 52 weeks, Danka's shares have sold for as low as 15 cents a share and as high as $1.37.
The copier industry has undergone sweeping changes during Danka's lifespan.
Dan Doyle and Frank McPeak formed the company in Tampa in 1977 when copiers were fast becoming a mainstay of corporate life. Their manufacturers were more interested in building the equipment than in distributing and servicing it, leaving a vacuum for service-oriented companies like Danka to fill.
Under Doyle's hard-driving leadership — "Dan is Danka" was the company's unofficial slogan — Danka grew swiftly through acquisitions. The distribution business was still highly profitable in 1994, when ex-Danka executive Tom Johnson founded a Tampa-based competitor, Global Imaging Systems.
But in 1997, Danka, by then a $3-billion company, made a crucial error when it took on massive debt to acquire the copier business of Eastman Kodak. As part of the $588-million deal, Danka assumed the job of servicing Kodak's existing network of installed copiers, acquired a substantial inventory of new ones to sell, and committed to purchase additional units in the future.
What was not clear at the time was that the analog copiers Danka purchased would soon be eclipsed by digital copiers that were more versatile, more reliable and cheaper to operate. Kodak's analog copiers quickly became dinosaurs, and the acquisition-related debt became a noose Danka couldn't shake.
Doyle, who had hailed the Kodak deal as a way to double revenues, left in late 1998 as losses mounted.
More recently, Danka and its industry have grappled with the blurring of the lines among copiers, printers, scanners and fax machines, and the rising popularity of multifunction devices that perform all four functions. Copier manufacturers and their distributors used to compete only within their industry. As printers and fax machines became more like copiers and vice-versa, manufacturers like Konica Minolta found themselves with a whole host of new competitors.
Price slashing resulted, and margins grew razor thin. In this highly charged competitive environment, manufacturers began building their own sales-and-service networks, which inevitably clashed with independent distributors like Danka selling the very same products.
Global Imaging, which unlike Danka had been consistently profitable and growing throughout its 13 years, profited from this sea change. Xerox acquired the Tampa firm a year ago for $1.5-billion to form the basis for its own in-house sales force.
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