Xerox to purchase printer maker Lexmark from Chinese language homeowners in $1.5 billion deal

By Jaspreet Singh and Aditya Soni

(Reuters) -Workplace tools producer Xerox (NASDAQ:XRX) has agreed to purchase Chinese language-owned printer and printing software program maker Lexmark Worldwide in a $1.5 billion deal to develop its presence in Asian markets and higher compete in an business upended by the digital age.

The acquisition from Ninestar, PAG Asia Capital and Shanghai Shouda Funding Centre will carry Lexmark again to U.S. possession. Fashioned out of IBM (NYSE:IBM) in 1991, Lexmark was offered to a gaggle of Chinese language buyers in a $3.6 billion deal in 2016.

Xerox, a family title globally, has posted income declines for 5 straight quarters as demand for printing tools sputtered and it confronted powerful competitors from HP (NYSE:HPQ) and Canon.

Its shares, down greater than 50% this yr, jumped 7% on Monday.

Lexmark, already a Xerox provider, will enhance its presence within the A4 shade printing phase, one of many few increasing areas in an business going through challenges because of the shift to digital paperwork.

The mixed firm is anticipated to serve greater than 200,000 shoppers in 170 nations and have a market share among the many high 5 companies globally in varied print segments.

Xerox expects the deal to instantly support revenue and ship greater than $200 million in annual value financial savings by serving to scale back advertising and actual property bills, amongst others.

“That cash could be reinvested for the longer term. Xerox has set themselves up for the longer term,” stated Zeus Kerravala, principal analyst at ZK Analysis.

In 2020, Xerox had made a $35 billion hostile bid for HP earlier than the COVID-19 pandemic hampered its plans. Its market worth has since shrunk to about $1 billion from round $8 billion that yr.

Xerox expects to finance the Lexmark deal, prone to shut within the second half of 2025, by means of money available and debt. To assist with the financing, it’s decreasing annual dividend to 50 cents per share from $1.

The corporate stated it doesn’t count on any regulatory challenges for the deal, which would wish approvals from nations, together with China.