Riso Kagaku Corp is in the process of acquiring Toshiba Tec’s inkjet head business after the board of directors of Toshiba Tec met on 22 December 2023 and agreed to conclude a definitive agreement with Riso.
The mechanism behind this acquisition is an absorption-type company split, which will take a few months to complete. This is because the inkjet head business is currently owned by both Toshiba Tec and Tec Precision Ltd, also known as TPI and which is a wholly owned subsidiary of Toshiba Tec. The inkjet head business only represents a very small percentage of Toshiba Tec’s business, which is mainly concentrated around electrophotographic printing equipment, mainly used in POS and multi-function peripherals, while TPI is responsible for manufacturing both the inkjet printheads and toner. So the Absorption-type company split agreement offers a legal structure to separate the inkjet head business out, while leaving these companies operating as normal. Both Toshiba Tec and TPI still need to agree a date for the split as well as its composition.
For its part, Riso will pay ¥7120 million, or £39.18 million, (or approximately Indian Rs 412 crore) in cash, which will be split between Toshiba Tec and TPI, with the exact amounts to be determined later. According to Toshiba Tec, neither side has engaged an outside source to value the assets; instead all the companies have arrived at this figure through “repeated earnest discussions.” Nonetheless, this figure is equivalent to five times the value of the net assets and seven times the operating profit of the inkjet head business that is to be split from Toshiba Tec and TPI.
However, its not yet clear what exactly is included in this arrangement. Toshiba Tec’s press release simply says that the assets, liabilities, agreements and other rights and obligations will be determined as part of the agreement around the absorption-type company split. There’s no specific mention of intellectual property or of the plant and manufacturing assets, though it’s hard to see how the inkjet printhead production could be moved out of TPI’s existing plant in Mishima, Japan, since TPI still plans to operate that plant to manufacture toner. That said, both Toshiba Tec and TPI have said that after the split they plan to second employees to the inkjet head business.
The press release does note, “The Company (Toshiba Tec) judges that there will be no problems concerning the certainty of the performance of obligations that are to be performed by the Succeeding Company on or after the effective date of the Absorption-Type Company Split.”
Riso is planning to set-up a subsidiary company to manage the Toshiba Tec inkjet head business by 1 April 2024 though the transfer itself is scheduled to complete by 1 July 2024 though these dates may change over the next few months.
Riso sees this acquisition as part of its Vision 25 strategy, which aims to expand its inkjet business by March 2025. In its press release, Riso simply notes that it will gain a new inkjet head technology and will continue to sell these heads. And it makes sense that Toshiba Tec would have approached Riso first since Riso buys its heads from Toshiba Tec and so this gives it more control over its own supply line.
Toshiba Tec’s press release says that this sale follows a review of its business portfolio and a decision to focus its efforts on achieving sustainable growth while contributing to solving unspecified social issues. Essentially, Toshiba Tec does not see inkjet as a strategic core business so it makes sense to sell it on. At the same time, some of Toshiba’s investors have questioned whether or not the Toshiba Tec subsidiary, which was set up in 1950, is still part of its core business. Toshiba itself dates back to 1875 and is one of Japan’s oldest tech companies, with interests in nuclear power, semi-conductors, home applicances and medical equipment though in recent years it has been caught up in an accounting scandal.
Toshiba Tec divests MFP business to Ricoh
Finally, it’s also worth noting that Toshiba Tec has already agreed to sell its business relating to the development and manufacture of office MFP devices to Ricoh. This has now been updated to also include multifunction peripherals, auto-ID systems and related products. Ricoh will take over these businesses between 1 April and 30 June 2024.
You can find further details of these companies at toshibatec.co.jp and riso.co.jp – these sites are in Japanese so for anyone who doesn’t speak Japanese Google Translate is your friend.
