Xerox barges into services with $6.4bn ACS buy
A copy cat acquisition
Copier giant Xerox plans to buy US outsourcing and data centre management giant Affiliated Computer Services Inc (ACS) for $6.4bn in a cash and stock deal.
The company announced its "game-changing" acquisition proposal today.
Xerox said it would cough up 4.935 of its shares and $18.60 in cash for each share of Dallas-based ACS, which totals $63.11 per share based on Friday's closing price.
Following the acquisition, the firm's boss Ursula Burns expects to see revenue from services to triple to around $10bn next year, compared with $3.5bn in 2008.
It will take on ACS's debt of $2bn and issue $300m of convertible preferred stock to the company's Class B shareholder.
"ACS will operate as an independent organisation and initially will be branded ACS, a Xerox Company. It will be led by Lynn Blodgett [ACS CEO], who will report to Ursula Burns," said the photocopier maker.
It added that the buyout would catapult the firm's value to a $22bn global powerhouse following the deal, which is expected to complete in the first quarter of 2010.
Xerox's planned buyout of ACS marks the latest in a series of multi-billion dollar services mergers made by tech giants in the past year.
Earlier this month Dell confirmed plans to scoop up Texas-based Perot Systems for $3.9bn.
Last year Hewlett-Packard bought EDS for $13.9bn. Just last week, it ditched the firm's brand altogether to underpin its successful takeover of the outsourcing giant that, like Perot Services, was founded by two-time US presidential candidate Ross Perot. ®