Time New York: Wed 20 Jun 11:24 am  |  Save 15% on H&R Block Online


Lexmark’s Buyout by Chinese Consortium Completed


The acquisition of printer and imaging products manufacturer, Lexmark International Inc. by a Chinese consortium was closed yesterday.

On Apr 19 this year, Lexmark agreed to be acquired by the consortium led by Apex Technology Co., Ltd. (Apex) and PAG Asia Capital (PAG) for $3.6 billion or $40.50 per share in cash. Legend Capital Management Co., Ltd. (Legend Capital) was also one of the buyers. In Oct 2016, Lexmark revealed in an SEC filing that the Committee on Foreign Investment in the United States (CFIUS) has approved its proposed buyout by the Chinese consortium.

The closure of the acquisition came after Lexmark shareholders’ unanimous approval, clearance by China's State Administration of Foreign Exchange and fulfillment of all other customary closing conditions. Shares of Lexmark common stock have stopped trading on the New York Stock Exchange. Since the announcement of this acquisition, shares of Lexmark have gone up 16.8%.

The Goldman Sachs Group, Inc. GS served as the exclusive financial advisor to Lexmark, while Wachtell, Lipton, Rosen & Katz constituted its legal counsel.

Post Integration

According to Lexmark, the integration is fully aligned with the company’s mission of alleviating pain, restoring growth and opportunity, and addressing customers’ need while providing new prospects for employees. The transaction is expected to meaningfully accelerate growth strategies for Lexmark’s hardware, software and managed print services solution by expanding the business in the Asia Pacific region.

Upon the completion of the transaction, David Reeder became the President and chief executive officer (CEO) of Lexmark. Reeder, who spent his entire career in technology, replaced Lexmark’s Chairman, and CEO, Paul Rooke who has worked at Lexmark for around 25 years.

According to Rooke, Lexmark chairman and chief executive officer, "We are excited to have completed the transaction, which provides significant cash value to our shareholders, benefits our customers and provides new opportunities for our employees."


Last Words

The Chinese consortium is expected to benefit from Lexmark’s hardware, software and managed print services Also, Lexmark provides complete digital printing solutions including inkjet and laser printers, multi-function products (MFP), photo printers and associated supplies and services for both office and home use. The company also sells dot matrix printers, which print single and multipart forms for business users, and offers a broad range of imaging products for offices.

Lexmark’s third-quarter results were not very encouraging. Though earnings increased on a year-over-year basis, revenues decreased primarily due to a strong U.S. dollar and the ongoing exit of the company from the Inkjet business.

In our opinion, the recent acquisition deal would be beneficial for Lexmark given that fact that it has been struggling amid changing industry dynamics.

Technology stocks that are currently doing well include FormFactor, Inc. FORM, NetApp, Inc. NTAP and TiVo Corporation TIVO, all carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

FormFactor, NetApp and TiVo have long-tern expected earnings per share growth rates of 12%, 10.67% and 10%, respectively.

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.