Xerox Holdings Corp. today announced plans to buy Lexmark International Inc., one of its main competitors in the printer market, for $1.53 billion.

The company plans to finance the deal with a combination of cash and debt financing. It’s buying Lexmark from Ninestar Corp., PAG Asia Capital and Shanghai Shouda Investment Centre.

Founded more than a century ago, Xerox is one of the world’s largest printer manufacturers. The company rose to prominence after it introduced the world’s first mass-market plain paper copier in 1959. A decade later, Xerox invented laser printers, which together with their inkjet counterparts dominate the printing market to this day.

Laser printers use a light beam to form powdered ink, or toner, into letters and shapes. The powder is first applied to a cylinder and then pasted from the cylinder onto a paper sheet to create the finished document. Laser printers are the go-to choice for text-heavy documents, while inkjet systems are mainly geared toward graphics-heavy projects.

Xerox makes printers for both the consumer and enterprise markets. Many of its machines use a so-called MFP design that combines a printer with a scanner and a copier. Additionally, Xerox sells industrial printing presses that can prepare up to several million pages per month and don’t have to be shut down when they’re loaded with new paper. 

Lexington, Kentucky-based Lexmark is a competing supplier of printers. It was formed in 1991 when a private equity firm turned IBM Corp.’s former printing and typewriter unit into a standalone company. Lexmark has a particularly large presence in the market for printers that use A4 color paper.

The company also competes with Xerox in the managed print services market. The two rivals provide professional services that help businesses digitize their paper documents and perform related tasks. 

Following the acquisition, Xerox and Lexmark plan to integrate parts of their respective product portfolio. The effort will place particular emphasis on the former company’s ConnectService app, which lets users digitize paper documents with their mobile devices. Xerox plans to integrate the software with Lexmark printers. 

“We’re combining our expertise to accelerate innovation and deliver faster development cycles, more advanced features, and a world-class printing experience,” Lexmark Chief Executive Officer Allen Waugerman wrote in a blog post. 

The combined company will have more than 200,000 customers worldwide along with 125 manufacturing and distribution facilities. Xerox estimates that it will have “top five global share” across the entry-level, mid and production print markets. 

The company says that the competitive benefits of the deal will accelerate its efforts to stabilize its revenue. Last quarter, Xerox’s sales declined 7.5% year-over-year, to $1.53 billion. The company expects to end 2024 with revenue down 10%. 

Xerox estimates that the deal will also bring it closer to its goal of achieving double-digit adjusted operating income. The company expects to achieve $200 million in annual cost synergies within two years of closing the acquisition. Thanks to those savings, its gross debt leverage ratio is set to decline from 6 today to 4.4.

Xerox expects to complete the acquisition in the second half of 2025.

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