What will Xerox's acquisition of printer maker Lexmark bring to business?

Xerox Holdings Corporation today announced that it has agreed to acquire laser printer manufacturer Lexmark International from Nastar Corporation, Pacific Alliance Asia Capital and Shanghai Capital Investment Center in a transaction valued at $1.5 billion, including assumed debt. Xerox said in a statement Monday that it would cut its annual dividend to 50 cents a share from $1 to help fund the acquisition. The transaction is expected to close in the second half of 2025. Xerox said the acquisition will strengthen its core print portfolio and build a broader global print and managed print services business to better meet the evolving needs of hybrid workplace customers. Xerox's acquisition will have a complex and multi-faceted impact on the business, one is the impact on Xerox itself, through the acquisition of Lexmark International, Xerox will be able to expand its product line, especially in the printing and on-demand services areas, thereby enhancing market competitiveness. Lexmark's deep expertise in printing technology and broad customer base will provide Xerox with a stable revenue stream that will help consolidate and expand its market share. Xerox expects the acquisition to have a positive impact on financial performance, including immediate accretion to earnings per share and free cash flow, as well as accelerated achievement of its financial targets, resulting in more than $200 million in cost synergies over two years, which will help reduce the company's operating costs. Following the acquisition, Xerox's total debt leverage is expected to be reduced, improving the company's financial position.

The second is the impact on the business landscape and competition, the acquisition marks a further consolidation of the printing and document management industry. Both Xerox and Lexmark are well-known players in the industry, and the acquisition will create a larger and more powerful market player, helping to raise the level of competition in the entire industry. Xerox's successful acquisition could prompt competitors to accelerate their merger plans to maintain or grow market share. This industry dynamic will drive a realignment of the entire print and document management landscape, accelerating consolidation and change in the industry. Lexmark International's strength in printing technology will bring technological improvements to Xerox and help drive technological progress and innovation across the industry. After the acquisition, Xerox will have a stronger market competitiveness, which will pose a certain pressure on other competitors, thus promoting the intensification of market competition.

The third is the impact on consumers and market demand, after the acquisition of Xerox will have a richer product line, including printers, copiers, document management systems, etc., to provide consumers with more choices. The technology integration of the two companies will help improve the performance and functionality of the products to meet consumer demands for high-quality printing and document management. As digital transformation accelerates, traditional printing needs are decreasing, but enterprise demand for advanced printing solutions is increasing. The acquisition will help Xerox capitalize on this market trend and meet enterprise demand for high-quality, efficient printing solutions.

The fourth is the impact of business strategy adjustment, Xerox also faces fierce competition from companies such as HP and Canon. To support strategic acquisitions and optimize capital structure, Xerox's Board of Directors approved changes to its dividend policy. Reducing the annual dividend from $1 per share to 50 cents per share, beginning with the dividend expected to be declared in the first quarter of 2025. Xerox expects to finance the deal through a combination of cash on hand and committed debt financing. The acquisition of Lexmark International will help Xerox strengthen its position in a highly competitive market. This will accelerate its transformation into an enterprise services and solutions provider. The combination of strategic resources and technologies will help Xerox develop more innovative products and services, and enhance its competitiveness and influence in the industry.

To sum up, the business implications of Xerox's $1.5 billion acquisition of Lexmark International are manifold. It not only changed the industry pattern and market competition situation, but also had a profound impact on other aspects. This acquisition brings new opportunities and challenges to the entire printing and document management industry.