Xerox to Buy Printer Maker Lexmark From Chinese Owners
Deal would value the closely held company at $1.5 billion, including debt
Xerox XRX -1.53%decrease; red down pointing triangle Holdings is nearing a deal for Lexmark International that values the maker of printers and printing software at $1.5 billion, including debt, according to people familiar with the matter.
The details
An acquisition of closely held Lexmark is expected to be announced Monday morning, the people said.
Xerox’s takeover of the business would bring Lexmark back under U.S. ownership. The company’s current owners are printer maker Ninestar Corp. 002180 -1.22%decrease; red down pointing triangle (formerly known as Apex Technology), listed in Shenzhen, China; private-equity firm PAG Asia Capital; and asset manager Shanghai Shouda Investment Centre.
Xerox is expected to finance the deal with a combination of cash on hand and committed debt financing, the people said.
The context
Xerox, based in Norwalk, Conn., had a market value of a little over $1 billion as of Friday. Its share price is down more than 50% year to date, and has come under pressure in recent months from lower-than-expected equipment sales.
Lexmark was formed out of IBM in 1991 and is based in Lexington, Ky. The company in 2016 agreed to be sold to a group of Chinese buyers for $2.54 billion, not including debt, taking it off the public market.
It has faced challenges recently. The U.S. last year blocked the import of goods made by Ninestar over the company’s alleged use of forced labor tied to China’s Xinjiang region.
Xerox has been led by Chief Executive Steve Bandrowczak since August 2022. At the start of this year, Xerox announced a new organizational structure to center the company around three priorities: its core print business; global business services; and information technology and digital services.
Xerox in October announced a $400 million deal for ITsavvy, a provider of IT products and services.
Activist investor Carl Icahn had been one of Xerox’s biggest investors for years but sold his remaining stake back to the company in late 2023. The two parties had feuded on and off over various strategic moves.
The rationale
The deal for Lexmark would roughly double Xerox in size and create a vertically integrated manufacturer, distributor and provider of printing equipment and services.
The acquisition would bolster Xerox’s core printing portfolio and help it expand its services globally, particularly in the Asia-Pacific region. The company would also benefit from Lexmark’s investments in a global supply chain and a growing market for a kind of color printing known as A4.
The two companies already have a relationship. Lexmark has been a supplier to Xerox for years.