The pair have signed a letter of intent regarding the "possible set up of a joint venture company in future specifically aiming at improving competitiveness of sheetfed offset printing machinery".
PrintWeek understands that talks have been going on for some time and have now reached the stage where the two Japanese manufacturers have decided to formalise the process. According to this morning's letter of intent, the pair have set a deadline of 30 June to conclude a final agreement.
This will establish the terms of any joint venture, including "significant synergy effects such as enhancement of product line-up, enlargement of product development capability, reduction of product cost, and improvement in sales and service networks".
"The plan is expected to enable the stronger presence in the global market," the statement said.
Bob Usher, managing director of Ryobi's UK distributor Apex Digital Graphics said that while the jury was still out on what shape any JV might take, one obvious area of consolidation would be in B1, where Ryobi lack a "big flaship B1 press".
"Ryobi brought their B1 to market just as the market was going into recession so they never saw the kind of sales that the other B1 press manufacturers benefitted from in the run up to the recession," he said.
"Mitsubishi has a well-established product in the Diamond, so you have two presses sitting on the block, one of which has a reputation for selling more into the market."
On the other hand Ryobi has a "huge installation base of B3 presses and a large B2 customer base", according to Usher, who added that one area where Ryobi has been getting a lot of traction is with its SRA1 format 920 series press, which has sold "several hundred around the world" since its launch in 2009.
"Mitsubishi has web presses as well, which Ryobi doesn't have, but then the web market is very difficult," he added. "The logical thing to do will be to develop the products that are successful and consolidate wherever possible."
He added that in terms of manufacturing capability, Ryobi was better invested, having recently spent "huge amounts of money on a new factory with a new production line".
Murray Lock, joint managing director of Mitsubishi's UK distributor M Partners, said: "From our side, strategically it makes sense. Obviously we'll keep all our customers involved, as and when we know more.
"Mitsubishi will make the right decision, based on business reasoning. The German manufacturers should have done something like this, but haven't."
According to an overview of both companies issued with the letter of intent, Mitsubishi's Paper & Packaging Machinery division had net sales of ¥43.6bn for the year ended 31 March 2012 and an operating income of ¥1.8bn.
Ryobi's net sales for the same period came in at ¥165.6bn, with an operating income of ¥7.7bn, although these figures cover the whole group, including sales from power tools, builders' hardware and die-cast products.
According to the investor section of Ryobi's website, it's printing equipment revenue has declined from ¥41bn in 2007/08 to ¥17.5bn in 2011/12. Its forecast revenue for the year ended 31 March 2013 is ¥15.2bn.Tweet