Japanese pondering Gestetner takeover

MAGNUS GRIMOND

Ricoh, the Japanese business machines giant, yesterday revealed it was considering a bid for Gestetner that would value the ailing UK photocopier distributor at about pounds 164m. It is thought to be only the second time a Japanese company has made such an approach to a British listed company.

Ricoh already owns 28.8 per cent of Gestetner's shares and has received an irrevocable undertaking from Inchcape, the international distribution conglomerate, to sell a further stake of 15.1 per cent at 90p a share. The news lifted capital shares in Gestetner 12p to 90p, while the more widely traded ordinary shares jumped 20.5p to 82p.

Gestetner, a name once synonymous with office duplicators, has seen its shares plunge after a succession of bad news recently. Since running up a pre-tax deficit of pounds 33m in 1993, the group has announced a pounds 6.1m loss on interest rate swaps in October and then shocked the stock market in May with a warning that problems in Canada would cost a further pounds 29m.

The two sides met on Wednesday, but any hope that Ricoh would get a recommendation from the Gestetner board were dashed by a statement from the company yesterday describing the Ricoh move as "an opportunistic attempt to exploit the recent fall in Gestetner's share price". David Thompson, chairman, said: "We are advising shareholders to sit tight while we talk to Ricoh about the real value of Gestetner."

The company also criticised Ricoh after it indicated that any offer for the ordinary capital would be likely to reflect the average 14 per cent discount at which the ordinary shares have traded to the capital shares over the past six months. This would put a value of around 79p on the ordinary shares.

Ricoh admits that there is no fundamental difference between the shares, other than that the capital issue pays dividends mostly in scrip. They emphasised that any offer would be forced to discriminate against the ordinary shares because of a rule in the Takeover Code.

Stephen King, Gestetner's finance director, said there was no reason for differential offers. "In economic value terms, we are making the point that there should be no differentiation, given that the only difference between the shares is the way they pay their dividends. Our advice is that the position is not totally black and white and we shall be discussing it with the [Takeover] Panel."

Ricoh supplies 60-70 per cent of Gestetner's copiers, worth over a fifth of the group's pounds 1.2bn sales in 1994, and has three directors on the Gestetner board.

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