Xerox agreed to buy Lexmark from its current owners for $1.5 billion in a landmark deal that will consolidate two iconic printer brands. Because of this, Bloomberg says that American and Chinese regulators must approve the purchase.
Although Xerox manufactures some of its printers, it also outsources production to other companies. This purchase would allow Xerox to bring manufacturing in-house using Lexmark’s facilities and gain market share in Asia and Latin America, says Xerox CEO Steven Bandrowczak.
Xerox is funding the acquisition with a combination of cash and debt. To help finance the deal, it will also reduce its annual dividend from $1 to 50 cents per share. Bloomberg Intelligence analyst Woo Jin Ho says that the purchase “could aid long-term profitability and shore up cash flow should it deliver on its cost synergies” for Xerox. Bloomberg says that Xerox stands to save $200 million annually with reduced sales and marketing costs or with the consolidation of its real estate operations.
Lexmark was spun off IBM in 1991 and went public in 1995. However, it experienced some hard times in 2016 when companies started going digital, leading to its acquisition by Chinese printer maker Apex Technology Co., now Ninestar Corporation, PAG Asia Capital, and Shanghai Shouda Investment Centre, for $3.6 billion. Nevertheless, despite being owned by Asian organizations, Lexmark’s board remained US-based, and its leadership team is all-American, according to its website.
This isn’t Xerox's first acquisition of another major company, as it unsuccessfully attempted to purchase HP in 2019. Because of the size of the deal, the Xerox-Lexmark deal would have to clear regulatory hurdles, including those in the U.S. and China. Even so, Bandrowczak doesn’t expect any regulatory challenges, and it’s anticipated that the deal will be completed by the second half of 2025.
The demand for printers is falling globally, especially as we’re quickly turning digital every year. This deal would likely help Xerox and Lexmark navigate these changing times and maybe even allow them to pivot their businesses. But even though Xerox is just known today for printers and copiers, it was once a giant in the computing industry, having made several innovations that had significantly impacted computer history, including the graphical user interface (GUI), laser printers, and the computer mouse.
