Inchcape links with Gestetner
Thursday 16 March 1995
The 50-50 joint venture, to start on 1 June, will be called Inchcape NRG and will fuse Inchcape and Gestetner's office automation businesses in Hong Kong and Macau, China, Singapore, Malaysia, Thailand, Australia and New Zealand, together with Gestetner's business in Taiwan. The deal also dovetails the parties' export businesses to third-party distributors in the region. The head office will be in Hong Kong. Each company will contribute £20m of net operating assets.
Inchcape, an international services and marketing company, has a 15 per cent stake in Gestetner that it began building in 1993 and which, in the past, aroused speculation that it had predatory intentions.
The Japanese office equipment maker, Ricoh, which works closely with both companies and has a 28 per cent stake in Gestetner, welcomed the initiative. It will supply the group along with other big hitters in the office equipment manufacturing industry, such as Konica, Hewlett Packard and Mita.
Job losses will be triggered among the 3,000 staff, with the axe most likely to fall in backroom and sales. Inchcape said the cuts would not be significant.
It is also believed that the venture will create increased purchasing power and sharpen profit margins. There will be one-off restructuring costs of £3.5m this year, including office closures, giving yearly savings of this amount from 1996.
Inchcape's office equipment businesses, slanted largely to photocopiers and fax machines, showed profits of £5.3m in 1994. Gestetner's equivalent business made profits of £3m in the 14 months to end-1994.
Inchcape will get £4m cash from Inchcape NRG because it is initially expected to chip in higher profits.
Charles Mackay, Inchcape's chief executive, said the partnership would give Inchcape NRG the size to be more effective in Asia Pacific - the world's fastest-growing office equipment market. Use of office equipment there is far lower than in the US, Europe and Japan, giving scope for growth.
The venture is expected to be relatively neutral on Inchcape's and Gestetner's earnings this year, but is expected to contribute positively afterwards.
Chief executive of Inchcape NRG will be Joe Newcombe, regional director of Inchcape's Chinese marketing arm.
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