Xerox has agreed to buy Affiliated Computer Services for $6.4 billion in its biggest purchase, it was announced today.
The deal, which sees Xerox shifting to computer services as sales of its traditional printing equipment decline, will help triple sales from services to about $10 billion, Xerox said today in a statement.
The total price of the cash-and-stock deal is about 34 per cent more than Dallas-based Affiliated Computer's closing price on September 25th.
The acquisition is CEO Ursula Burns's first since taking over the world's largest maker of high-speed colour printers in July. The transaction helps her expand into a market the company values at about $150 billion and gives her a foothold in managing administrative operations for multiple arms of the US government.
"With this combination, our tool box just got a lot bigger," Affiliated Computer CEO Lynn Blodgett said in an interview. Mr Blodgett will run the business as a unit of Xerox and report to Ms Burns (51).
Under the deal, Xerox will pay $18.60 a share in cash and 4.935 Xerox shares for every Affiliated Computer share, amounting to about $63.11. Xerox also will assume about $2 billion in Affiliated Computer's debt.
Almost 90 per cent of Affiliated Computer's new business contracts last year came from outsourcing, or managing operations for other companies. Total sales rose 5.9 per cent to $6.5 billion in the year ending June 30th.
Xerox has posted sales declines for three straight quarters, with analysts projecting a fourth, according to the average of estimates compiled by Bloomberg.
Bloomberg