Xerox Plans to Acquire Lexmark International for $1.5 Billion

Investing.com -- Renowned office equipment manufacturer Xerox is set to acquire Lexmark International, a printer and printing software manufacturer currently owned by China, in a deal worth $1.5 billion, according to a company announcement made on Monday.

Lexmark International, which spun off from IBM in 1991, was sold in 2016 to a consortium of Chinese investors for $3.6 billion. This consortium included Ninestar Corp, PAG Asia Capital, and Shanghai Shouda Investment Center. With this acquisition, Lexmark will return to U.S. ownership.

Xerox has been struggling with declining revenues for five consecutive quarters due to the decreasing demand for printers and related equipment in the digital age. The company also faces stiff competition from other industry giants such as HP and Canon. Xerox's shares have fallen by more than 50% this year, although they were trading about 5% higher before the market opened on Monday.

Acquiring Lexmark along with its debts will provide Xerox with the much-needed scale to compete more effectively. The combined company is expected to serve over 200,000 customers across 170 countries and hold market share among the top five firms globally in various printing segments.

The agreement will also enable Xerox to expand its presence in the Asia-Pacific region and enhance its capacity to reach customers in the growing A4 segment, which includes smaller format printers and copiers commonly used in homes and offices.

Xerox plans to finance the acquisition, expected to be completed in the second half of 2025, through a mix of cash and debt financing. To help reduce debt, Xerox is cutting its annual dividend from $1 per share to 50 cents, starting with a dividend announcement expected in the first quarter of 2025.