Xerox Holdings agreed to acquire Lexmark International from Ninestar, PAG Asia Capital and Shanghai Shouda Investment Centre in a deal valued at $1.5 billion, inclusive of assumed liabilities. This acquisition is aimed at strengthening the Xerox core print portfolio and building a broader global print and managed print services business better suited to meet the evolving needs of clients in the hybrid workplace.

“Our acquisition of Lexmark will bring together two industry-leading companies with shared values, complementary strengths, and a deep commitment to advancing the print industry to create one stronger organization,” Steve Bandrowczak, CEO of Xerox, said. “By combining our capabilities, we will be better positioned to drive long-term profitable growth and serve our clients, furthering our reinvention.”

The transaction is also aimed at strengthening the ability of Xerox to serve clients in the A4 color market and to diversify its distribution and geographic presence, including the APAC region. The new organization will serve more than 200,000 clients in 170 countries with 125 manufacturing and distribution facilities in 16 countries.

“Lexmark has a proud history of serving our customers with world-class technology, solutions and services, and we are excited to join Xerox and expand our reach with shared talent and a stronger portfolio of offerings,” Allen Waugerman, president and CEO of Lexmark, said. “Lexmark and Xerox are two great companies that together will be even greater.”

“Our shared values and vision are expected to streamline operations and drive efficiencies, taking the best of both companies to make it easier to do business with Xerox,” Bandrowczak said.

Under the terms of the agreement, Xerox will acquire Lexmark for total consideration of $1.5 billion, inclusive of net debt and other assumed liabilities. Xerox expects to finance the acquisition with a combination of cash on hand and committed debt financing.

In conjunction with this financing, the Xerox board of directors approved a change in the dividend policy to reduce the Xerox annual dividend from $1 per share to 50 cents per share starting with the dividend expected to be declared in the first quarter of 2025. This lowered dividend payment provides incremental capacity to reduce debt while continuing to reward shareholders with an above-market yield.

The Xerox board of directors unanimously approved the transaction. The transaction is subject to regulatory approvals, approval of Ninestar’s shareholders and other customary closing conditions. It is expected to close in H2/25. Until then, both Xerox and Lexmark will maintain their current operations and operate independently.

Jefferies is serving as the financial advisor to Xerox and Citi is also providing financial advice. Ropes & Gray and Willkie Farr & Gallagher are serving as legal advisors to Xerox. Morgan Stanley is serving as financial advisor to Lexmark and Strait Capital Management is serving as financial advisor to Ninestar. Dechert is serving as legal advisor to Lexmark, as well as Ninestar, PAG Asia Capital and Shanghai Shouda Investment Centre and King & Wood Mallesons is serving as PRC counsel to Ninestar.