Xerox reinvention continues

Xerox to acquire Lexmark in $1.5bn A4 colour printing move

Xerox's reinvention, announced in early 2024, has seen several strategic acquisitions in late 2024

Xerox has agreed to acquire laser printer manufacturer Lexmark in a $1.5bn (£1.2bn) deal, buying out the consortium of Chinese investors that bought it in 2016.

The deal, which valued Lexmark inclusive of its assumed liabilities, will strengthen Xerox’s print portfolio by bringing in several lines of printers suitable for corporate in-house reprographics and the A4 colour market.

With Lexmark taken on board, Xerox will serve more than 200,000 clients across 170 countries, taking a top five global share in each of the entry-, mid- and production-level print markets, the company stated.

“Our acquisition of Lexmark will bring together two industry-leading companies with shared values, complementary strengths, and a deep commitment to advancing the print industry to create one stronger organization,” said Steve Bandrowczak, chief executive officer at Xerox.

“By combining our capabilities, we will be better positioned to drive long-term profitable growth and serve our clients, furthering our Reinvention.”

Based in Lexington, Kentucky, Lexmark was already a partner of and supplier to Xerox. Being able to connect Lexmark’s machines with Xerox’s ConnectKey workflow at the source, as well as offering with Xerox’s print and digital services, will give customers greater value, according to Xerox.

Lexmark may also have an opportunity to expand its machinery portfolio with additional A3 kit, according to the firm. Its higher-volume range currently extends to SRA3.

“Lexmark has a proud history of serving our customers with world-class technology, solutions and services, and we are excited to join Xerox and expand our reach with shared talent and a stronger portfolio of offerings,” said Allen Waugerman, Lexmark president and chief executive officer. “Lexmark and Xerox are two great companies that together will be even greater.”

“Our shared values and vision are expected to streamline operations and drive efficiencies, taking the best of both companies to make it easier to do business with Xerox.”

Xerox has identified more than $200m of cost synergies to be realised within two years of the transaction, and has stated the acquisition will reduce Xerox’s pro forma gross debt leverage ratio from 6.0 in September 2024 to 5.4 before the synergies are realised, estimating a further reduction to 4.4 afterwards.

The company will reduce its annual dividend from $1 to $0.50, starting from the first quarter of 2025.

Subject to regulatory conditions, the cash and committed debt financed-deal is expected to close in the second half of 2025.

Lexmark is currently owned by Ninestar Corporation, PAG Asia Capital, and Shanghai Shouda Investment Centre. The sale also requires the approval of Ninestar's shareholders. The consortium acquired Lexmark eight years ago in a $3.6bn deal.

Xerox’s acquisition comes as the latest part of its ‘reinvention’ strategy, which has seen the company reduce its workforce, cut legacy machine production, focus on its digital and print services, and release multiple new print products, including forging brand-new partnerships like that with Inkjet machine manufacturer Screen.

In October, Xerox signed a deal to acquire ITsavvy, a US provider of integrated IT products and associated services, for $400m.

Xerox's share price rose by 6.23% to $8.91 following the news (52-week high: $19.78, low: $8.02).