(WEB HOST INDUSTRY REVIEW) — Xerox Corporation (www.xerox.com) has announced a definitive agreement for Xerox to acquire business process outsourcing firm Affiliated Computer Services (www.acs-inc.com) for $6.4 billion worth of cash and stocks.
According to Xerox’s Monday announcement, the acquisition accelerates Xerox’s growth in the $150 billion business process outsourcing sector.
“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,” Xerox chief executive officer Ursula M. Burns said in a statement. “A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.”
With the addition of ACS, Xerox becomes a $22 billion global enterprise for document technology and business process management, $17 billion of which is recurring revenue. “The revenue we generate from services will triple from $3.5 billion in 2008 to an estimated $10 billion next year,” Burns stated.
Xerox hopes to achieve increase its revenue by leveraging Xerox’s strong global brand and established client relationships to scale ACS’s business in Europe, Asia and South America. Xerox will also integrate its intellectual property with ACS’s services to create new solutions for end-to-end support of customers’ work processes.
Considered the largest managed services provider to government entities in the US, ACS provides solutions for managing paper-based work processes and provides specialized BPO and IT services for industries that range from telecommunications, retail and financial services to healthcare, education and transportation. Over the 2009 fiscal year, ACS revenue grew six percent, and its new business signings topped $1 billion.
Xerox expects to save as much as $400 million in operating costs annually in the first three years following the close of the transaction, based on expense reductions related to public company costs, procurement and using ACS’s expertise in back-office operations to handle some of Xerox’s internal functions.
“We’re proud of our significant profitable growth over the past 20 years and our ability to manage our clients’ operations with a global infrastructure and workforce,” ACS president and chief executive officer Lynn Blodgett said in a statement. “We also know that for ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation. Xerox offers that and more to bring our business to the next level while strengthening theirs.”
The acquisition is subject to the closing conditions of domestic and foreign regulatory approvals, as well as the approval of ACS and Xerox stockholders. The transaction has been approved by the Xerox and ACS boards of directors and ACS special committee and is expected to close in the first quarter of 2010. ACS will operate as an independent organization and initially will be branded “ACS, a Xerox Company,” led by Blodgett, who will report to Ursula Burns.
No related posts.
