Xerox announces $6.4 bn takeover deal
Washington: Xerox Corp announced Monday it was buying Affiliated Computer Services in a cash-and-stock deal valued at 6.4 billion dollars that gives the US photocopier company a foothold in a new market.
Xerox said it will pay 63.11 dollars per share for the Dallas-based outsourcing company, a premium of 33 percent over ACS`s closing price on Friday.
Xerox said the purchase of ACS, the world`s largest diversified business process outsourcing firm, will make it the "leading global enterprise for document and business process management."
"By combining Xerox`s strengths in document technology with ACS`s expertise in managing and automating work processes, we`re creating a new class of solution provider," Xerox chief executive Ursula Burns said in a statement.
"Acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth," she said, calling it a "a game-changer for Xerox."
"The revenue we generate from services will triple from 3.5 billion dollars in 2008 to an estimated 10 billion dollars next year," said Burns, who took over as CEO of Xerox on July 1.
ACS shareholders will receive a total of 18.60 dollars per share in cash plus 4.935 Xerox shares for each ACS share they own.
Norwalk, Connecticut-based Xerox will also assume ACS`s debt of two billion dollars and issue 300 million dollars of convertible preferred stock to ACS`s Class B shareholders.
"For ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation," said ACS president and chief executive Lynn Blodgett.
"Xerox offers that and more to bring our business to the next level while strengthening theirs," Blodgett said.
Xerox said ACS will operate as an independent organization and initially will be branded ACS, a Xerox company. It will be led by Blodgett, who will report to Burns.
ACS provides information technology services to a variety of industries ranging from telecommunications, retail and financial services to health care, education and transportation.
Xerox and ACS said business process outsourcing is estimated to be a 150 billion dollar market, growing at a rate of five percent per year.
The deal, which will need regulatory approval, is expected to close in the first quarter of 2010.
ACS shares soared 16.52 percent to 55.06 dollars in early trading in New York while Xerox shares were down 14.27 percent at 7.69 dollars.
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