Xerox will acquire Lexmark International, a Chinese-owned company specializing in printer-making and printing software development.
The mentioned deal will cost $1.5 billion. The relevant information was published by the specified firms on Monday, December 23. Xerox also noted that the implementation of the specified deal will help strengthen its mainstay business.
The purchase from Ninestar Corp, PAG Asia Capital, and Shanghai Shouda Investment Centre will bring Lexmark back into US ownership. This printer manufacturer and developer of printing software was formed out of IBM in 1991. In 2016, the company was acquired by a group of Chinese investors. The cost of this deal was $3.6 billion.
Xerox has recently seen a downward dynamic in its revenue. The corresponding indicator has been declining for five consecutive quarters. This tendency is because, in the era of active development and scaling of digital technologies, there is a process in a certain sense a natural decrease in consumer demand for printers and relevant equipment. The current financial performance of Xerox is an example of how the change of dominant technologies in the world significantly reduces or even cancels the former greatness of individual companies. The firm is also facing increased competition, including from brands such as HP and Canon.
Since the beginning of the current year, the value of the shares of the mentioned company has decreased by more than 50%. The implementation of the deal to acquire Lexmark, which includes its debt, will provide Xerox with the scale it needs to increase competitiveness. The combined business structure is currently expected to serve more than 200,000 customers in 170 countries. It is also predicted that this structure will enter the top 5 largest firms in the world in various print segments.
The deal to acquire Lexmark will allow Xerox to expand its presence in the Asia-Pacific region. At the same time, the company’s ability to tap customers in the expanding A4 segment, which includes smaller format printers and copiers commonly used at homes and in offices, will be strengthened.
The deal on the acquisition of Lexmark is expected to be closed in the second half of next year. The company intends to finance this business agreement through a combination of cash on hand and debt financing.
As part of the financing, Xerox is reducing its annual dividend to 50 cents per share from $1, starting with the one expected to be declared in the first quarter of 2025 to help efforts to lower debt.
It is worth noting that in October, Xerox announced that it would acquire ITsavvy, an Illinois-based IT products company. The cost of this deal is $400 million. The acquisition of ITsavvy is related to Xerox’s plans to scale up its business in the IT services sector. It is highly likely that the implementation of the relevant intentions will improve the financial performance of the company.
Xerox was founded in 1906. The company became world famous after it introduced the world’s first mass-market plain paper copier in 1959. Ten years later, Xerox invented laser printers, which, along with their inkjet counterparts, still dominate the global printing market.
Laser printers use a light beam to shape powdered ink or toner into letters. In this case, the powder is first applied to a cylinder and then pasted from the cylinder onto a paper sheet to create the finished document. Laser printers are the best choice for text-heavy documents. Inkjet systems are primarily designed for graphics-heavy projects.
Xerox manufactures printers for both the consumer and enterprise markets. Many of the company’s machines use a so-called MFP design that combines a scanner, printer, and copier. Xerox also sells industrial printing presses that can prepare up to several million pages per month and that do not need to be stopped when loading new paper. It is worth noting that the company has been competing with Lexmark in the managed print services market for many years.
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