Xerox Corp. signed an agreement to acquire Affiliated Computer Services (ACS) in a cash and stock transaction valued at $63.11 per share or US$6.4 billion, as of the closing price of Xerox stock on September 25.
Headquartered in Dallas, ACS is described as the world’s largest business process outsourcing (BPO) firm. It employs more than 74,000 people, working with multinational corporations and government agencies in over 100 countries from 500 locations. The transaction, which has been approved by the Xerox and ACS boards, is expected to close in the first quarter of 2010.
”By combining Xerox’s strengths in document technology with ACS’s expertise in managing and automating work processes, we’re creating a new class of solution provider,” said Ursula Burns, Xerox CEO, who described the deal as a “game-changer” for the company. “Xerox becomes a US$22 billion global company, of which US$17 billion is recurring revenue – a significant boost to our profitable annuity stream. The revenue we generate from services will triple from US$3.5 billion in 2008 to an estimated US$10 billion next year.”
In addition to the exchange of shares, Xerox will assume ACS’s debt of US$2 billion and issue US$300 million of convertible preferred stock to ACS’s Class B shareholders. On an adjusted earnings basis, Xerox expects the transaction to be accretive in the first year.
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