IBM ( IBM) said Thursday that it is selling its printer business to Japan-based Ricoh for $725 million in cash.

The two companies will initially form a joint venture called InfoPrint Solutions, with Ricoh holding a 51% stake. Ricoh gradually will acquire the remaining 49% over three years, as the venture becomes a fully owned subsidiary of the company.

Ricoh will pay Big Blue the $725 million, including a $35 million management fee, after the first part of the deal closes. The figure represents payment for the 51% acquisition and prepayment for the remaining 49%.

The initial transaction should be completed in the second quarter of 2007.

"The eventual transfer of the IBM Printing Systems Division to Ricoh enables IBM to continue to refine its focus on its strategic businesses and the clients of those businesses," IBM CEO Samuel Palmisano said in a statement.

IBM's printing business accounted for about $1 billion in revenue in 2006, IBM said. The total pretax gain anticipated on the transaction will be between $175 million and $275 million over three years.

InfoPrint Solutions' headquarters will be in Boulder, Colo. (currently the headquarters of IBM's printing systems division). The head of IBM's printing division, Tony Romero, will serve as CEO and president of InfoPrint Solutions.

IBM shares added 32 cents to $97.72 in recent trading.

Editor's note: Please click here for a video interview about the deal with Ricoh President & CEO Masamitsu Sakurai .

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