Office equipment manufacturer Xerox is to buy Chinese-owned printer and printing software maker Lexmark International in a $1.5 billion deal to expand its presence in Asian markets and better compete in an industry upended by the digital age.
The purchase from Ninestar, PAG Asia Capital and Shanghai Shouda Investment Centre will bring Lexmark back to U.S. ownership. It may be observed that Lexmark was formed out of IBM in 1991 and was sold to a group of Chinese investors in a $3.6 billion deal in 2016.
Also notable is the fact that Xerox, a household name globally, has posted revenue declines for five straight quarters as demand for printing equipment sputtered and it faced tough competition from HP and Canon. Its shares, down in the last year, jumped 7% on recently
Lexmark, already a Xerox supplier, will boost its presence in the A4 color printing segment, one of the few expanding areas in an industry facing challenges due to the shift to digital documents.
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.
Xerox expects the deal to immediately aid profit and deliver more than $200 million in annual cost savings by helping reduce marketing and real estate expenses, among others.
In 2020, Xerox had made a $35 billion hostile bid for HP before the COVID-19 pandemic hampered its plans. Its market value has since shrunk to about $1 billion from around $8 billion that year.