On December 23, 2024, Xerox Holdings Corporation announced its agreement to acquire Lexmark International, Inc. from Ninestar Corporation, PAG Asia Capital, and Shanghai Shouda Investment Centre in a deal valued at $1.5 billion, including assumed liabilities. This acquisition aims to strengthen Xerox’s core print portfolio and expand its global print and managed print services business, better positioning it to meet the evolving demands of clients in the hybrid workplace.
Steve Bandrowczak, CEO of Xerox, stated that the acquisition will unite two industry-leading companies with complementary strengths and shared values, creating a stronger organization dedicated to advancing the print industry. He emphasized that combining capabilities will enhance Xerox’s long-term growth prospects and its ability to serve clients, driving its ongoing Reinvention.
Lexmark, based in Lexington, Kentucky, is a leading provider of innovative imaging solutions, including a top-tier range of printers and multifunction devices. The acquisition will combine Lexmark’s products with Xerox’s ConnectKey technology and advanced Print and Digital Services, creating a more robust offering for clients and reinforcing Xerox’s commitment to delivering greater value to customers and partners.
The acquisition will also enhance Xerox’s ability to serve clients in the growing A4 color print market and diversify its distribution and geographic footprint, particularly in the APAC region. Together, the two companies will serve over 200,000 clients across 170 countries and operate 125 manufacturing and distribution facilities in 16 countries. Combined, Xerox and Lexmark have a top-five global market share in entry, mid, and production print, and are key players in the large, stable managed print services sector.
Allen Waugerman, CEO of Lexmark, expressed excitement about the partnership, noting that Lexmark has a history of providing world-class technology and services, and that joining Xerox will expand the company’s reach through shared talent and a stronger portfolio.
Bandrowczak added that the shared values and vision between Xerox and Lexmark are expected to streamline operations and drive efficiencies, making it easier for customers to do business with Xerox.
Also Read: Movate Leads Everest Group’s 2024 Mid-Market PEAK Matrix for Mid-Market Enterprises
Transaction Rationale:
Strategic Fit: Xerox and Lexmark’s complementary operations provide a vertically integrated manufacturer, distributor, and provider of print equipment and managed print services, covering all geographies and client types with a comprehensive portfolio.
Growth Opportunities: Lexmark is a leader in the growing A4 color print market and sees opportunities to expand within the A3 equipment category. The acquisition will enhance Xerox’s product portfolio, offering growth in equipment and managed print services, along with opportunities to expand Digital Services and IT Solutions.
Financial Benefits: The transaction is expected to be immediately accretive to earnings per share and free cash flow. Xerox anticipates that the deal will accelerate its financial targets, including revenue stabilization and double-digit adjusted operating income, as well as $200 million in identified cost synergies within two years.
Improved Balance Sheet: The acquisition will reduce Xerox’s pro forma gross debt leverage ratio from 6.0x to 5.4x before synergies, and to 4.4x with the benefit of $200 million in cost synergies. Xerox aims to reduce its gross debt leverage ratio below 3.0x in the medium term, thanks to improved cash flow and a focus on debt repayment.
Transaction Details:
Under the agreement, Xerox will acquire Lexmark for $1.5 billion, including net debt and assumed liabilities. Xerox plans to finance the acquisition with cash on hand and committed debt financing.
As part of the transaction, Xerox’s Board of Directors has approved a change in its dividend policy, reducing the annual dividend from $1 per share to 50 cents per share, effective from the first quarter of 2025. This reduction will provide additional capacity to reduce debt while still offering shareholders an above-market yield.
The transaction has been unanimously approved by Xerox’s Board of Directors. It is subject to regulatory approvals, Ninestar’s shareholder approval, and other customary closing conditions. The acquisition is expected to close in the second half of 2025, with both Xerox and Lexmark continuing to operate independently until that time.