(Reuters) - Office equipment manufacturer Xerox will buy Chinese-owned printer and printing software maker Lexmark International in a $1.5 billion deal to bolster its mainstay business, the companies
Xerox to Acquire Lexmark in $1.5 Billion Deal
(Reuters) - Office equipment manufacturer Xerox will buy Chinese-owned printer and printing software maker Lexmark International in a $1.5 billion deal to bolster its mainstay business, the companies said on Monday.
The purchase from Ninestar Corp, PAG Asia Capital and Shanghai Shouda Investment Centre will bring Lexmark back to U.S. ownership. Formed out of IBM in 1991, Lexmark was sold to a group of Chinese investors in a deal valued at $3.6 billion in 2016.
Xerox, a household name globally, has seen its revenue shrink for five straight quarters as demand for printers and related equipment sputtered in the digital age. The company also faces tough competition from HP and Canon, among others.
Its shares, down more than 50% this year, were trading nearly 5% higher before the bell.
The Lexmark deal, which includes its debt, will provide Xerox a much-needed scale to compete better. The combined company is expected to serve more than 200,000 clients in 170 countries and have a market share among the top five firms globally in various print segments.
The deal would also allow Xerox to expand its presence in the Asia-Pacific region while strengthening its ability to tap customers in the expanding A4 segment, which includes smaller-format printers and copiers commonly used in homes and offices.
Xerox expects to finance the deal, likely to close in the second half of 2025, 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 with its efforts to lower debt.
Xerox had said in October it would buy ITsavvy, an Illinois-based IT products firm, for $400 million as it looks to expand its IT services business.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar)
