DECEMBER 22, 1997
Danka in a spin
A year ago Tom Walkinshaw unveiled Danka Business Systems as the new title sponsor of the Arrows Formula 1 team. The deal was for at least two years. Since then, however, Danka - which is one of the world's largest office machinery firms - has run into serious financial difficulties as a result of its $684m acquisition of the office imaging businesses of Eastman Kodak. The company's shares fell an alarming 57% last Tuesday when the company indicated that its sales were down dramatically because of the restructuring that has been necessary since the Kodak deal. This followed a 28% fall on a single day last summer. Shares are now trading at around one quarter of the price in May 1996.
The company has also announced another 1000 job losses to add to a similar figure announced earlier this year. In the circumstances it is hard to see how the management of Danka can justify continuing in F1, particularly as the team has now lost Damon Hill. Even before the share collapse there was uncertainty as to whether Danka would continue as the title sponsor of Arrows. On the official FIA Formula 1 World Championship entry list the name of the Arrows title sponsor was left open.
Although this does not sound like a very healthy situation with only Parmalat confirmed as a sponsor, it may provide the Arrows team with the opportunity to sign a big new deal - possibly involving a new tobacco company.
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