Commentary & Analysis
Konica Minolta Completes Acquisition of Danka Office Imaging
On April 8th of this year,
By Cary Sherburne
Published: July 8, 2008
On April 8th of this year, Konica Minolta announced that it would acquire long-struggling Danka Office Imaging, ending literally years of speculation about what would happen to the company. That acquisition was finalized June 27th, and on July 1st, Konica Minolta hosted a web session for press and analysts to talk about the future of the combined organization.
Danka Office Imaging services over 45,000 customers (and more than 90,000 users) across the United States and generated approximately $450 million in total revenue for its fiscal year ending March 31, 2007. Under the terms of the agreement, the total purchase price was expected to be approximately US $240 million.
As expected, Konica Minolta reported that moving forward, Danka will sell only Konica Minolta products but will continue to sell third-party solutions as they have in the past. Konica Minolta was obviously attracted by Danka’s large customer base, as well as its presence in the production market. To that end, the combined company will continue its relationship with Kodak at the high end, adding to other production relationships such as that with Océ. Danka headquarters will remain in St. Petersburg, Florida. Company representatives asserted that this acquisition will offer an upward mobility opportunity for Danka’s approximately 2,000 employees for the first time in a long time.
Because the companies were already collaborating prior to the acquisition, many of Danka’s sales and service professionals have already been trained on Konica Minolta products, and Danka will benefit from Konica Minolta brand recognition and what company representatives described as its “marketing muscle.” The company affirmed that it is up and running and ready to sell and service Konica Minolta products across its network.
Effective July 1, Danka will no longer be an authorized Canon dealer, but according to the company, Canon has been very cooperative in making it possible for Danka to continue servicing existing Canon customers with parts and supplies, as has Toshiba. The company will continue to sell some HP printers, as well.
From a channel perspective, although there is potential for channel conflict, with overlap in almost all markets between Danka and Konica Minolta’s 80+ direct sales branches, Konica Minolta’s Kevin Kern stated that he believes conflict between branches, dealers and Danka will be minimal, adding, “Our goal is to create a balanced distribution that makes sense for growth objectives, but gives an opportunity for dealers and branches to make money.” He points out that the most notable changes will be access by the Danka channel to the popular Konica Minolta color line and an opportunity for dealers and branches to upgrade their installed base to Konica Minolta devices. At the same time, he assured listeners that from a corporate standpoint, Konica Minolta intends to completely support all of the sales Danka has made in the past, including guarantees, warranties, and service contracts, and will acquire OEM parts and supplies to service those existing customers, as evidenced by discussions the company has already had with Canon and Toshiba.
Rick Taylor, Senior EVP and CEO of Konica Minolta Business Solutions USA, pointed out that for Konica Minolta, the addition of professional services that comes with the Danka acquisition is a very focused strategic objective for the company as a whole, saying, “We will expand any capabilities Danka has that we don’t already have into our direct and dealer sales organization.” The company also plans to keep Danka’s Digital Solution Center in St, Petersburg intact for the benefit of large major accounts and Konica Minolta as a whole.
This acquisition appears to be a good move for Konica Minolta, and certainly is good for Danka and its employees who have undergone significant uncertainly as the company struggled financially over the past several years. With the elimination of Danka as a channel for Canon and Toshiba, it will be interesting to see what happens with market share in the highly competitive MFP market and how those two companies plan to make up for any shortfall this may cause for them. It will also be interesting to watch what impact, if any, this will have on Danka competitor and Konica Minolta customer IKON Office Solutions, a key channel for both Canon and Ricoh products.