Xerox plans to acquire Lexmark International for $1.5 billion

Investing.com -- Xerox (NASDAQ:XRX ), a well-known office equipment manufacturer,

will acquire Lexmark International, a printer and printing software maker currently owned by China i n a $1.5 billion deal, the companies announced on Monday.

Lexmark International, which originated from IBM (NYSE:IBM ) in 1991, was sold to a consortium of Chinese investors for $3.6 billion in 2016. The consortium included Ninestar Corp, PAG Asia Capital, and Shanghai Shouda Investment Centre. With this acquisition, Lexmark will return to U.S. ownership.

Xerox has been grappling with a decrease in revenue for five consecutive quarters due to a decline in demand for printers and related equipment in the digital era.

The company also faces stiff competition from other industry giants such as HP (NYSE:HPQ ) and Canon. Xerox's shares have dropped more than 50% this year, but were trading nearly 5% higher before the market opened on Monday.

Acquiring Lexmark, including its debt, will give Xerox the much-needed scale to compete more effectively.

The merged company is projected to serve over 200,000 clients in 170 countries and hold a market share among the top five firms globally in various print segments.

The deal will also enable Xerox to grow its presence in the Asia-Pacific region and strengthen its capacity to reach customers in the growing A4 segment. The A4 segment includes smaller-format printers and copiers frequently used in homes and offices.

Xerox plans to finance the acquisition, which is expected to be finalized in the second half of 2025, through a mix of cash on hand and debt financing.

To aid in reducing debt, Xerox is cutting its annual dividend to 50 cents per share from $1, starting with the dividend anticipated to be declared in the first quarter of 2025.

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Source: Investing.com