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Xerox Holdings Corp. (NASDAQ: XRX) shares plunged nearly 16% last week after the company announced an 80% cut to its quarterly dividend, reducing it from $0.125 to $0.025 per share. This move comes as Xerox prepares to finalize its acquisition of Lexmark International, a $1.5 billion deal aimed at expanding its global footprint and enhancing its product offerings.(Reuters)
The dividend reduction is part of Xerox’s strategy to redirect cash flow towards debt reduction and to finance the Lexmark acquisition. The company currently holds approximately $3.5 billion in debt, with a debt-to-equity ratio of 3.33. By cutting the dividend, Xerox aims to lower its debt-to-equity ratio to around 3x post-acquisition .(AInvest, AInvest)
Investors reacted negatively to the announcement, with Xerox’s stock price dropping to $4.395 on the day of the news, marking a 14.16% decline . The dividend cut, while financially strategic, has raised concerns among income-focused investors.(GuruFocus, AInvest)
The Lexmark acquisition is expected to close in the second half of 2025 and is anticipated to provide Xerox with increased scale and market share, particularly in the Asia-Pacific region and the A4 segment. The deal will be financed through a combination of cash and debt, with the dividend reduction helping to support debt repayment efforts .(Reuters)
While the dividend cut may be disappointing to some shareholders, Xerox views it as a necessary step to strengthen its financial position and support long-term growth through strategic acquisitions.
Xerox president and COO John G. Bruno acquires $109,500 in stock
https://www.investing.com/news/insider-trading-news/xerox-president-and-coo-john-g-bruno-acquires-109500-in-stock-93CH-4065070
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