[Leica] Konica/Minolta Merger

[Craig Schroeder <craig@craigschroeder.com>]

Here's text paste of something that was on another discussion group 
yesterday that may have implications on things related to Leica users' 
interests:

Konica Corp., Minolta Co. Holding Merger Talks (Update3)
By Ryoko Imaizumi and Yukiko Takai

Tokyo, Jan. 7 (Bloomberg) -- Konica Corp. and Minolta Co., two Japanese 
camera and precision machinery makers, are in merger talks as the two 
face increasing competition from consumer electronics companies and 
bigger rivals such as Canon Inc.

The companies will merge under a holding company in July, the Sankei 
newspaper reported earlier, without citing anyone. Merger talks are 
underway, said Konica spokesman Katsuyuki Sakai. Details haven't been 
decided, he said.

The companies are negotiating, Minolta said in a statement released 
through the Osaka Securities Exchange. Trading in shares of Konica and 
Minolta was suspended at 8:20 a.m. on the Tokyo and Osaka stock exchanges.

Precision machinery makers face increasing competition from Sony Corp., 
Sanyo Electric Co. and other electronics companies in the sale of 
digital cameras and computer printers. Still, the benefit of a merger is 
unclear as neither Konica nor Minolta holds a clear edge in any product 
category, an investor said.

``It's a big question mark what kind of benefit the reported merger will 
bring,'' said Yoshiya Morimoto, who helps manage 30 billion yen ($249 
million) in equities at Japan Investment Trust Management Co.

Competitive Advantage

``Whether it's digital cameras or copy machines, neither Konica nor 
Minolta have a competitive advantage'' over their rivals, he said. 
Morimoto sold his stake in Konica in December.

The combined company, with annual sales of 1.05 trillion yen in the 2002 
business year ended March 31, would be the fourth- biggest 
precision-machinery maker in Japan after Canon, Fuji Photo and Ricoh Co.

Konica's market capitalization of 311 billion yen is about double that 
of Minolta. An eventual merger could be worth as much as 195 billion yen 
given Minolta's current market capitalization of 148 billion yen and 
46.5 billion yen in long term debt as of March 31, according to 
Bloomberg data.

Minolta's ratio of debt to assets was 56 as of March 31, the highest 
among Japanese photo equipment and supply companies, according to data 
compiled by Bloomberg. It's short-term lending rose 10 percent to 193.5 
billion yen as long-term borrowings fell 24 percent to 46.5 billion yen.

Moody's Investors Service in May cut Minolta's rating one level to B2, 
five levels below the lowest investment-grade rating The U.S. rating 
company said Minolta's growing dependency on bank borrowing contributed 
to the cut, and that earlier job cuts and other cost-cutting steps by 
Minolta may not be enough to counter growing competition.

Under the plan, Konica will in April set up a holding company, with 
which Minolta will later merge. The two companies will announce the plan 
after holding board meetings later this month, the newspaper said.



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