Xerox to Acquire Lexmark from Ninestar at a Deep Discount

Xerox (NASDAQ:XRX) is set to acquire printer and software company Lexmark International II from China-based Ninestar Corp in a deal valued between $75 million and $150 million—significantly below the $1.5 billion figure announced in December 2023.

In a recent stock exchange filing, Ninestar cited Lexmark’s current operational performance as the reason for the reduced price range. The final amount will be based on updated financials, including adjusted net operating capital and estimated transaction-day cash, minus Lexmark’s outstanding debt and transaction costs.

This transaction marks a dramatic discount from the original $1.5 billion valuation, which included assumed liabilities from Ninestar, private equity firm PAG, and Shanghai Shouda Investment Centre. Despite the lower price, the acquisition will bring Lexmark back under U.S. ownership. The company was originally formed as a spinoff from IBM (NYSE:IBM) in 1991 and was sold in 2016 to a group of Chinese investors in a $3.6 billion deal.

Xerox aims to leverage the acquisition to strengthen its position in Asian markets and improve overall profitability. The company anticipates over $200 million in annual cost savings by reducing marketing and real estate expenses, according to its December announcement.

This move aligns with Xerox’s broader strategy to streamline operations and boost margins amid industry shifts toward digital and cloud-based printing solutions. The deal is also expected to enhance Xerox’s global footprint and provide access to Lexmark’s enterprise customer base.

While the final sale price remains uncertain, the deal underscores the evolving valuation of tech hardware firms amid changing market dynamics and geopolitical considerations.