Xerox is set to acquire fellow OEM print vendor Lexmark in a deal worth US$1.5 billion.

 

Xerox announced it had agreed to buy Lexmark from its shareholders: Ninestar, PAG Asia Capital and Shanghai Shouda Investment Centre. 

 

The US$1.5 billion figure includes debt and other assumed liabilities, with Xerox intending to finance the transaction through a combination of cash on hand and committed debt financing.

 

“By combining Lexmark’s solutions with Xerox ConnectKey technology and advanced print and digital services, the acquisition will create a superior offering portfolio and underscores Xerox’s commitment to increasing value for clients and partners,” Xerox stated.

 

It added: “The transaction will also strengthen the ability of Xerox to serve clients in the large, growing A4 colour market and diversify its distribution and geographic presence, including the APAC region. The new organisation will serve more than 200,000 clients in 170 countries with 125 manufacturing and distribution facilities in 16 countries. Combined, Lexmark and Xerox have a top five global share in each of the entry, mid and production print markets and are key players in the large, stable managed print services market.”

 

Lexmark was acquired by a consortium headed by Ninestar for US$3.6 billion at the end of 2016. Today, its annual revenue is around US$2.2 billion, with an adjusted operating margin of 9.2%, about double Xerox’s current margin.

 

Other key takeaways from the transaction announcement include:

 

The acquisition is expected to close in the second half of 2025, subject to regulatory approvals and the green light from Ninestar’s shareholders.

 

The combined businesses have pro forma annual sales of US$8.57 billion and adjusted operating margin of 8.4%. This margin figure includes the positive impact of US$200 million in synergies that have been identified.

 

The majority (US$125 million) of these synergies are slated to come from reduced SG&A across four main ‘buckets’: sales and marketing spend reduction; elimination of duplicate roles; real estate consolidation; and shared services centre consolidation.

 

The remaining US$75 million is anticipated to come from supply chain and manufacturing (US$30 million), services (US$25 million) and R&D (US$20 million).

 

Together, Xerox and Lexmark will have a 25% share of the US$14 billion global MPS market.

 

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