Xerox stock soars after $1.5B acquisition of printer maker Lexmark

The Key Takeaways

• Xerox has announced it will purchase Lexmark International, a privately owned company in China for $1.5 billion. This is to better serve clients with hybrid work environments.
• This move is expected to expand the company’s reach into the Asia-Pacific Region (APAC).
• Xerox is reducing its dividend by half in order to pay for this deal.

Xerox Holdings shares (XRX) jumped almost 7% Monday intraday after the company announced that they were buying private Lexmark International, from their Chinese owners for $1.55 billion. This was to accommodate the increasing number of flexible-scheduled workers. In order to cover costs, the company cut in half its dividend. 

The company said the deal would "strengthen the Xerox core print portfolio and build a broader global print and managed print services business better suited to meet the evolving needs of clients in the hybrid workplace."

Xerox said that it will be able to better serve its clients on the A4-color APAC market and also expand their reach.

Xerox to Trim Dividends To Help Pay For Acquisition

It was noted by the company that money would be raised for the purchase through existing cash and debt. It stated that it would reduce its dividend to $0.50 annually from $1.00 starting in the first half of 2025. Xerox said the move "provides incremental capacity to reduce debt while continuing to reward shareholders with an above-market yield." 

This transaction should close by the end of 2025. 

Despite today's gains, shares of Xerox Holdings are down 50% this year.

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