(Bloomberg) — Xerox has agreed to buy printer maker Lexmark International Inc. from a consortium of Asian investors in a deal valued at $1.5 billion.
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The transaction includes debt and other liabilities that Xerox will assume from current owners Ninestar Corp., PAG Asia Capital and Shanghai Shouda Investment Centre. Xerox will cut its annual dividend to 50 cents a share from $1 to help finance the takeover, according to a company statement Monday. The deal is expected to close in the second half of 2025, pending approval from US and Chinese regulators.
Acquiring Lexmark will bring manufacturing in-house and improve exposure to markets in Asia and Latin America, Chief Executive Officer Steven Bandrowczak said on a call with analysts Monday.
Lexmark, spun off in 1991 by International Business Machines Corp., is already a partner and supplier to Xerox. More than $200 million in annual cost savings are expected for the combined company by reducing sales and marketing expenses or from real estate consolidation. Xerox will also be able to save money by pooling procurement and buying toner in bulk.
The deal “could aid long-term profitability and shore up cash flow should it deliver on its cost synergies,” said Woo Jin Ho, an analyst at Bloomberg Intelligence.
Lexmark has strong exposure to color printing on standard document paper, one of the few segments of the printer market which is expected to grow in the near future, Xerox said in a presentation.
Shares of Xerox gained 8.7% in New York Monday morning. They are down more than 75% over the last five years.
Lexington, Kentucky-based Lexmark is led by CEO Allen Waugerman, who has been with the company since its founding. An investor group led by Chinese printer maker Apex Technology Co. and dealmaker Shan Weijian’s PAG agreed eight years ago to buy the company in a deal valued at $3.6 billion including debt. Chinese investment firm Legend Capital was also part of the consortium. Since the deal, Apex later changed its name to Ninestar.
After the takeover by the Asian consortium, it has remained governed by a US-based board of directors and kept an all-American executive team, according to its website.
The deal will require antitrust approvals across jurisdictions, including Chinese regulator approvals. Xerox isn’t expecting and “regulatory challenges,” Bandrowczak said.
