By John Meyer, consultant in financial affairs – Eurasia Business News, December 24, 2024. Article No 1345.

Xerox has announced its acquisition of Lexmark for $1.5 billion, a deal that is expected to enhance Xerox’s position in the printing industry. The transaction, which includes the assumption of Lexmark’s debt, is set to close in the second half of 2025, pending regulatory approvals and shareholder consent from Lexmark’s current owners, Ninestar Corporation, PAG Asia Capital, and Shanghai Shouda Investment Centre.

Key Details of the Acquisition

Strategic Goals: Xerox aims to strengthen its core print portfolio and expand its global managed print services. The acquisition will enable Xerox to better address the evolving needs of clients in a hybrid workplace environment, particularly in the growing A4 color printer market.

Financial Implications: The deal is expected to be immediately accretive to Xerox’s earnings per share and free cash flow. Xerox anticipates realizing over $200 million in cost synergies within two years post-acquisition. This acquisition will also improve Xerox’s balance sheet by reducing its gross debt leverage ratio from 6.0x to approximately 5.4x before synergies are realized, and further down to around 4.4x afterwards.

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Market Position: With this acquisition, Xerox will serve more than 200,000 clients across 170 countries and strengthen its presence in various print markets, including entry-level, mid-range, and production-level segments.

Dividend Policy Change: To facilitate the acquisition and improve financial flexibility, Xerox has announced a reduction in its annual dividend from $1 to $0.50 starting in the first quarter of 2025.

Xerox CEO Steve Bandrowczak emphasized that this merger will unite two industry leaders with complementary strengths and shared values, positioning the combined entity for long-term profitable growth.

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© Copyright 2024 – Eurasia Business News. Article no. 1345.