Two US-based printer organizations namely Xerox and Lexmark has announced that the former is seeking the acquisition of the latter through a merger deal that is worth US1.5 billion.
According to Tom’s Hardware and Bloomberg, the acquisition will be financed through a mix of cash and debt but it requires approval from both American and Chinese regulators to see it through.
Although Xerox did have its own in-house manufacturing line and equipment, apparently it wasn’t enough and with Lexmark’s facilities, it could help them expand its presence across other regions such as Asia and Latin America, following the words of CEO Steven Bandrowczak.
As for Lexmark, it originated as part of IBM’s business department but was spun off in 1991 and then publicly listed in 1995 with the most recent “trouble” being its bad fiscal year of 2016 attributed to difficulty in digital transformation processes. After that, it is acquired for $3.6 billion by a consortium that included Apex Technology Co. (now Ninestar Corporation), PAG Asia Capital, and Shanghai Shouda Investment Centre.
In terms of how much merit the acquisition would bring to the table, Woo Jin Ho who is one of the Bloomberg Intelligence analysts, stated that it “could aid long-term profitability and shore up cash flow should it deliver on its cost synergies,” with Xerox potentially saving $200 million annually by reducing sales and marketing expenses and consolidating real estate operations.
While the global printer business won’t be going anywhere soon due to the necessity of physical copies for certain critical sectors and industries that rely on printed papers, it is still important for brands to adapt to shifting market trends while exploring any business pivots that could be worthwhile.
