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Bond Market News
Xerox’s Bonds Rise on Agreement to Acquire Lexmark for $1.5bn
December 24, 2024
Xerox has agreed to acquire Chinese-owned printer and software maker Lexmark International for $1.5bn, with an aim to strengthen its position in Asian markets and compete better in the evolving print industry. Xerox will acquire Lexmark from Ninestar, PAG Asia Capital, and Shanghai Shouda Investment Centre. This would return Lexmark to US ownership after its 2016 sale to Chinese investors for $3.6bn. Xerox has struggled with five consecutive quarters of revenue decline amid shrinking demand for printing equipment and competition from HP and Canon. Lexmark, which is already a supplier to Xerox, will enhance Xerox’s presence in the growing A4 color printing market. The merged entity is expected to serve 200k clients across 170 countries, ranking among the top five firms globally in key print segments. Xerox also expects $200mn in annual cost savings and immediate profit growth from the deal, with plans to reinvest savings into future initiatives. The deal is expected to close in late 2025. Xerox will use cash and debt to finance the acquisition and will cut its annual dividend.
Xerox’s bonds were higher, with its 5.5% 2028s up 1.4 points to 86.46, yielding 10.03%.
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