Xerox Holdings Corporation has announced an agreement to acquire Lexmark International, Inc. in a deal valued at $1.5 billion, including assumed liabilities. The purchase, partially financed with debt, aims to strengthen Xerox’s position in the global printing and managed services market, better adapting to the needs of today’s hybrid work environment.
Uniting Forces to Lead the Industry
The merger of these two leading companies combines their complementary capabilities to create a more robust organization. Steve Bandrowczak, CEO of Xerox, emphasized: “This acquisition brings together two companies with shared values and complementary strengths, allowing us to drive long-term profitable growth and enhance our offerings to customers.”
Lexmark, based in Lexington, Kentucky, is known for its advanced solutions in printing and multifunction technologies. The integration of these capabilities with Xerox® ConnectKey® solutions will expand the product and service offerings for over 200,000 customers in 170 countries.
Strategic and Financial Impact
The agreement seeks to diversify Xerox’s geographical presence, particularly in the Asia-Pacific region, and strengthen its position in the color A4 printing market, a growing segment. Additionally, the deal is expected to generate over $200 million in cost synergies over the next two years.
From a financial perspective, Xerox anticipates that the acquisition will be immediately accretive to earnings per share and free cash flow. It will also reduce its gross leverage ratio from 6.0x to 5.4x initially, with a projection to lower it below 3.0x in the medium term.
Restructuring and Adjustments
To facilitate financing for the acquisition, Xerox has announced a reduction in its annual dividend from $1 to $0.50 per share, a measure aimed at freeing up resources to reduce debt while maintaining a dividend yield above the market average.
Challenges and Opportunities in Integration
While the deal promises to strengthen the capabilities of both companies, it also brings challenges in integration. These include aligning corporate cultures, optimizing processes, and retaining key customers and employees.
The transaction, subject to regulatory and shareholder approvals, is expected to close in the second half of 2025. Until then, both companies will operate independently.
A Strategic Move in a Competitive Sector
With this acquisition, Xerox seeks to bolster its position against competitors such as HP and Canon, while diversifying its business in an ever-evolving landscape toward digital services. For its part, Lexmark will contribute its expertise in cloud and IoT technology, key areas for digital transformation of businesses.
This transaction marks a pivotal moment in the printing and managed services sector, uniting two giants to address the challenges and opportunities of the future.