The proposed merger of office equipment vendors, Konica and Minolta, is due to be completed this week.
While financial details of the arrangement were not available at the time of going to press, Konica would clearly have an upper-hand in the new relationship – products will be branded Konica Minolta and it is Konica’s president, Fumio Iwai, who will head up the new organisation.
IDC analyst, Keith Kmetz, said this was not surprising given that Konica contributed a higher share of combined revenue and Minolta debt levels appeared to be deeper.
He said the merger was necessary for both companies to survive and compete in an increasingly competitive market because it had become increasingly difficult for second- and third-tier players to gain market share.
The merger is expected to bring the new organisation closer to market leaders Canon and Ricoh while intensifying pressure on smaller players that are left even further behind.
Inform analyst, Stuart James, noted the companies were of similar size and said mergers or acquisitions were used increasingly to achieve growth.
“A lot of growth these days is organic,” he said. “It is very difficult in a competitive environment to gain market share by growing faster than your competitors.”
Konica Minolta is expected to reduce its global workforce of 38,500 by 10 per cent during the next three years, according to IDC, but it is not yet clear whether those cuts would affect Australian employees.
The relative strengths of Konica and Minolta are thought to be complimentary.
Kmetz said Konica was well placed in the high-end market and toner development, while Minolta does well in the colour printer and print engine technology markets.
He said they have also worked together during recent years, developing high-speed mono and colour engines as well as polymerised toner for the office equipment market.
Locally, IDC credited Minolta with an 18.3 per cent share of the colour laser printer market for the first half of 2003 and said it was the price leader in that segment.
It has less than 1 per cent of the mono laser printer market.
Konica had a seven per cent share of the Australian multi-function printer (MFP) market at the end of the last calendar year, according to IDC, while Minolta had six per cent.
IDC research director, Joel Martin, predicted both companies would have strong installations in the traditional copier space that they would upgrade to digital models or MFPs.
The companies first revealed intentions to merge when announcing they had signed a letter of intent in January. Details of the stock-swap ratio, as well as implications for the local channel, will appear on ARNnet once they are made public.