| Key Points: – Xerox acquires Lexmark for $1.5 billion, bringing the printer and software maker back under U.S. ownership. – The deal enhances Xerox’s global scale, with a combined client base of 200,000 across 170 countries. – Xerox reduces its dividend to fund the acquisition, aiming to close the transaction by late 2025. |
Xerox (NASDAQ: XRX), a global leader in office equipment, has announced its acquisition of Lexmark International in a $1.5 billion deal. The purchase brings Lexmark, previously owned by a consortium of Chinese investors, back under U.S. ownership. This strategic acquisition aims to bolster Xerox’s core business and expand its reach in the competitive global printing market.
Lexmark, formed from IBM in 1991, was sold to Chinese investors in 2016 for $3.6 billion. This acquisition by Xerox not only returns the printer and software maker to American hands but also strengthens Xerox’s ability to compete in a rapidly evolving market. With five consecutive quarters of declining revenue and increasing competition from HP, Canon, and others, Xerox sees this move as pivotal for growth and innovation.
The combined company will serve over 200,000 clients across 170 countries, positioning Xerox among the top five global firms in various print segments. Lexmark’s expertise in the expanding A4 segment—smaller-format printers and copiers commonly used in homes and offices—provides Xerox with enhanced capabilities to meet customer needs.
In addition to improving Xerox’s global scale, the acquisition strengthens its presence in the Asia-Pacific region, a critical area for growth. “This transaction aligns with our strategy to optimize operations and deliver superior value to our customers and stakeholders,” said Xerox CEO Steve Bandrowczak.
To finance the deal, which includes Lexmark’s debt, Xerox plans to use a combination of cash reserves and debt financing. As part of this effort, Xerox will reduce its annual dividend to $0.50 per share from $1, starting with the first quarter of 2025. The company expects the transaction to close in the second half of 2025, pending regulatory approval and customary closing conditions.
The acquisition comes at a time when Xerox is diversifying its portfolio to include IT services. In October 2024, Xerox acquired ITsavvy, an Illinois-based IT products firm, for $400 million to expand its capabilities beyond traditional printing solutions. This dual strategy underscores Xerox’s commitment to adapting to a digital-first economy while reinforcing its foundational business.
The Lexmark deal offers a path to improved revenue and operational efficiency. By combining resources, Xerox and Lexmark aim to capitalize on synergies, reduce costs, and deliver innovative solutions to customers worldwide. With demand for printers and related equipment declining in the digital age, the partnership signals a renewed focus on adaptability and value creation.
The acquisition is expected to reignite investor confidence in Xerox, whose shares, down over 50% this year, rose nearly 5% in premarket trading following the announcement. As Xerox and Lexmark move forward, this deal could redefine the competitive landscape in the global print and software industry, offering both companies a stronger footing to navigate market challenges and opportunities.
