Steel's Tenacity Pays Off With $84M Gain At Ikon Office Solutions

Ikon Office Solutions announced a deal today to be purchased by Ricoh for $17.25 per share. The offer represents a 33% premium over IKN's 60-day average stock price.

As of June 30, 2008, Steel owned 12,456,300 shares at an average cost of $10.51/share. Assuming the deal goes through, Steel will realize a hefty $84M gain on their four year investment.

Steel began pressuring IKN in June 2007 to do a $850M share buyback at $17.50/share. After Steel announced their intention to obtain board representation, IKN announced (in November 2007) a $500M buyback - which included a $295M dutch auction between $13 and $15/share and the balance to be purchased on the open market over the next year or so. As a result, Steel signed a standstill agreement and agreed not to seek board representation through 2009.

IKN ran into a little difficulty a few months later after a bad quarter and after having their credit rating downgraded by S&P. In March 2008 IKN scaled back the previously announced share buyback and disclosed that their standstill agreement will Steel will expire as a result - leaving Steel open to nominate directors to the board this year.

No doubt, feeling ongoing pressure by Steel (and other activist shareholders holding 5%+ of IKN's stock), IKN's board actively pursued strategic alternatives that included this sale.