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Xerox buys ACS
Monday, 28 September 2009 00:00

Another hardware vendor jumps on a major outsourcing provider. Xerox, the $17 billion copier and document processing giant has acquired $6.5 billion outsourcing roll-up ACS. ACS, of course, has a huge document-centric outsourcing practice, but does all sorts of other outsourcing as well. Its current CEO Lynn Blodgett, is a former data entry outsourcing specialist, whose history actually goes back to Unibase, where he worked with current Kofax CEO Reynolds Bish.

Over the past couple years, ACS has generated more than $500 million in cash each year, but it also has $2 billion in debt that Xerox will assume. According to the Wall Street Journal, "Xerox's deal values ACS shares at $63.11 each, a 34% premium to Friday's closing price and 55 cents below the stock's record high set in February 2006. Holders would get $18.60 and 4.935 shares of Xerox for each ACS share. Xerox also will assume $2 billion of ACS debt and issue $300 million of convertible preferred stock."

The deal should make Xerox a $22 billion company with some $10  billion in worldwide service revenue. ACS' international revenue was very limited, like $.5 billion annually, while Xerox has a more mature international services business, so there should be some synergies there.

Here's a line from the presentation give by Xerox, "The lines between business process
and document management are blurring." - which makes a lot of sense. We've talked a lot recently about enterprise capture and how it needs to feed several areas of an organization, presumably with different workflows. Of course, the same can be said for document output world, where Xerox also plays.

The acquisition, of course, follows, HP's acquisition of EDS and Dell's of Perot Systems, so it's all pretty fascinating. Does this mean that people like Kodak and Fujitsu will buy document imaging service bureaus? BancTec and Scan-Optics have already started down this path.

 

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