NORWALK, CT – The Xerox Corporation is following in the footsteps of HP and Dell with Monday’s announced acquisition of Affiliated Computer Services, Inc. for about $6.4 billion in cash and stock.
Xerox officials said the deal will create a $22 billion business that merges Xerox’s document management services with ACS’ business process outsourcing services. ACS, based in Dallas, provides software and solutions for several industries, including healthcare.
The acquisition marks Norwalk, Conn.-based Xerox’s continued efforts to diversify from the printing and copying business, which has been hit hard by the recession. Company officials said the acquisition of ACS, a $6.5 billion company, will triple its services revenues to an estimated $10 billion a year.
The deal also gives Xerox a foothold in the lucrative healthcare market, and follows similar moves by two other technology giants. Last year, Hewlett Packard acquired Plano, Texas-based Electronic Data Systems (the company last week announced that EDS will now be named HP Enterprise Services) for $13.9 billion, and earlier this month Dell acquired Plano, Texas-based Perot Software for $3.9 billion.
The deals reportedly leave the Los Angeles-based Computer Sciences Corp. as the one remaining independent outsourcing vendor.
Xerox CEO Ursula Burns hailed the acquisition as a “game-changer.”
“By combining Xerox's strengths in document technology with ACS' expertise in managing and automating work processes, we're creating a new class of solution provider," she said in a statement. "A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.”
The boards of both companies have approved the deal. ACS will continue to function independently of Xerox, while being known as ACS, a Xerox Company. The company will be headed by CEO Lynn Blodgett.
"For ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation," Blodgett said in a statement. "Xerox offers that and more to bring our business to the next level while strengthening theirs.”
Xerox will pay cash and acquire ACS’ outstanding shares for $63.11 per share, well above the $57.05 per-share price reached in pre-market trading Monday. In contrast, Xerox’s shares dropped more than 10 percent in early morning trading as investors voiced concerns about ACS’ $2 billion debt and raised questions about integration of the two companies.
