Xerox Ink Goes ‘Global’

Xerox  said it has signed a definitive
agreement to acquire office technology dealer Global Imaging Systems  for $29 per share in cash. The deal, worth approximately
$1.5 billion, is expected to close in May.

Global Imaging focuses on the small- and medium-sized business (SMB) sector through 21 regional companies in the U.S. that sell and service document-management systems, such as printers, copiers and multifunction devices. It also offers network integration services and helps SMBs set up electronic presentation systems. The company serves nearly 200,000 customers and generates more than $1 billion in annual sales.

Once the acquisition is complete, Global Imaging will start selling Xerox document-management products. Anne Mulcahy, Xerox chairman and CEO, said that, in addition to the new revenue stream, the deal gives Xerox access to more
than 1,400 regional salespeople selling Xerox products in this lucrative

“We’ll increase our distribution to SMB customers by more than 50
percent… earning an even greater share of the $16 billion SMB document
market in the U.S.,” she said in a statement.

According to research firm IDC, SMBs’ installations of laser printers and multifunction products have been increasing at a compound annual growth rate of 15 percent over the last five years.

Xerox competes in a crowded field that includes Ricoh,
Dell , Canon, Lexmark, Okidata and HP  in this high-volume, low-margin business. Recent price wars
have erupted over the price of ink and toner.

There is even greater imperative to get a hold on the SMB market,
given that the field is likely to become even more competitive, with
impending printers that either don’t use any ink at all or print at super fast speeds.

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