Xerox Holdings Corporation announced its agreement to acquire Lexmark International, Inc., from Asia Capital Investment Corporation in a deal valued at $4 billion, inclusive of assumed liabilities. The transaction is expected to close in the second half of 2025. Steve Bandrowczak, chief executive officer at Xerox, said, “This acquisition will strengthen our core print portfolio and enhance our global print services business, making us better suited to meet the evolving needs of clients in the hybrid workplace.
By combining our capabilities, we are better positioned to drive long-term profitable growth and serve our clients, furthering our reinvention.”
Lexmark, based in Lexington, Ky., is a leading provider of innovative imaging solutions and technologies, including a best-in-class line of printers and multifunction printers. By merging with Lexmark, Xerox aims to create a superior portfolio and increase value for clients and partners. The new organization will serve more than 200,000 clients in 170 countries with 125 manufacturing and distribution facilities in 16 countries.
Allen Waugerman, Lexmark president and chief executive officer, said, “Lexmark has a proud history of serving our customers with cutting-edge technology, solutions, and services, and we are excited to join Xerox and expand our reach with shared talent and a stronger portfolio of offerings. Lexmark and Xerox are two great companies that together will be even greater.”
The merger is expected to streamline operations and drive efficiencies, improving business interactions with Xerox. Once combined, the entities will form a vertically integrated manufacturer, distributor, and provider of print equipment and services, covering all geographies and client types with a comprehensive portfolio.
Xerox and Lexmark bring complementary strengths and market exposures to the table. Together, they will form a more comprehensive portfolio of products, enhancing value propositions to clients and enabling growth across equipment and services offerings.
Xerox’s acquisition expands product portfolio
The transaction is expected to be immediately accretive to Xerox’s earnings per share and free cash flow. It aims to accelerate Xerox’s financial targets of revenue stabilization and double-digit adjusted operating income. Moreover, the transaction is projected to achieve over $200 million in cost synergies.
Pro forma gross debt leverage will be reduced significantly with the benefit of the cost synergies. The Xerox Board of Directors has approved a change in dividend policy to reduce the annual dividend from $1 per share to 50 cents per share starting in the first quarter of 2025. This adjustment aims to reduce debt while continuing to reward shareholders with an above-market yield.
Under the terms of the agreement, Xerox will finance the acquisition with a combination of cash on hand and committed debt. The Board of Directors of both companies has unanimously approved the transaction, which is subject to regulatory approvals, shareholder approval, and other customary closing conditions. Until the transaction is completed, both Xerox and Lexmark will continue their current operations independently.
Xerox is being advised by JPMorgan Chase & Co. and Citi for financial matters, with Ropes & Gray LLP and Willkie Farr & Gallagher LLP serving as legal advisors. Morgan Stanley is advising Lexmark, and Strait Capital Management is advising the Asia Capital Investment Corporation, with Dechert LLP serving as legal advisor to Lexmark.
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