Danka Business Systems is set to become the largest independent photocopier distributor in the world after it announced yesterday the $684 million (£438 million) acquisition of Kodak's distribution business.
Shares in the highly-acquisitive office equipment supplier, which are listed in London and New York, rose 82 1 /2p to 557 1 /2p on the news of the deal, which also includes a long-term supply agreement with Kodak.
Mark Vaughan-Lee, chairman, said the acquisition, which will treble Danka's sales, gave it access to the high-volume copier market - the fastest growing segment - and allowed it to offer a complete range of products.
Analysts said Danka, which is paying less than the business's net assets of $800 million and only 38 per cent of its $1.8 billion annual sales, had struck a good deal. The disposal will leave Kodak with a book loss of $250 million and an unprofitable manufacturing operation with revenues of about $600 million a year.
Kodak is believed to have sought a buyer for the entire business after announcing plans to ''reposition'' the unit earlier this year, but without success. Yesterday, the US company sought to put a positive gloss on the partial disposal, which it said would meet its original objectives of improving Kodak's overall growth prospects and profit margins.
Carl Kohrt, assistant chief operating officer, added that Kodak planned to make the manufacturing division profitable by the end of 1997, and that its commercial imaging operations would benefit from its continued investment in research and development.
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The deal is to be financed from a new $1.2 billion banking facility and will leave Danka with borrowings of more than $1 billion.
After the deal, Florida- based Danka will have revenues of $3.5 billion, a level that will leave it far behind Xerox, which generated revenues of $16.6 billion last year.
Dan Doyle, chief executive, said Danka's aim was to increase sales to $5 billion by March 2000. Danka's market share would still only be 6 per cent in the US, 4 per cent in continental Europe and and 14 per cent in the UK, the group said.
Fuelled by acquisition-led growth, including 50 separate purchases last year, shares in Danka have risen from 49p in September 1992.
However they fell sharply in June this year after a profits warning.
Analysts repeated concerns yesterday about the group's rapid growth but raised forecasts for next year's pre-tax profits from 114m to 135m.