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Xerox not interested in Lexmark International bid, CEO says
Xerox, the No. 1 maker of advanced color printers, will not bid for ailing Lexmark International, said CEO Anne Mulcahy.
“There’s
nothing that Lexmark would bring to the table,” she said during an
investor call to discuss 3Q results for listed Stamford,
Connecticut-based Xerox. Rather, Xerox will target mid-range targets in
software, distribution and services, she said.Xerox, with a market
capitalization of USD 15.9bn, reported 3Q cash and investments of USD
848m. The company reported 3Q net dropped 53% to USD 254m because of
prior-year tax benefit, as revenue rose 12% to USD 4.2bn.Speculation
concerning listed Lexmark, based in Lexington, Kentucky, has swirled
the past two years and prompted a 2006 review of whether the No. 2
maker of office printers should consider an LBO, former director BC
Ames said in an earlier interview. Ames was also vice chairman of
Clayton, Dubilier & Rice, the P/E firm that bought the company from
listed IBM in 1991. Lexmark’s IPO was in 1995.In July, when Lexmark
announced it would miss 2Q revenue and income targets, CEO Paul
Curlander said he was not exploring an LBO. The company has not yet
reported 3Q results.Lexmark, with a market capitalization of
USD 3.98bn and enterprise value of USD 3.6bn, has seen a 2.1% boost in
its shares on the NYSE this month. The shares are down 32% over the
past year. The company’s price-earnings ratio is only 11.53, compared
with Xerox’s 14.5 and 18.4 for listed Hewlett-Packard, the biggest
maker of PC printers.Another prospective suitor frequently mentioned is
listed Dell, the No. 2 PC maker, which has long distributed Lexmark
printers under its own label. Dell, though, has been ensnared by
internal and US Government probes of its financial reports, which have
ended. The company said it expects to file complete revised reports by
next month.CEO Michael Dell, who took back the past in January, has
said he wants to focus the company more on services, which would likely
rule out a Lexmark purchase. Listed Eastman Kodak, which entered the PC
printer market this year, has also been mentioned as a suitor, but CEO
Antonio Perez has said he is not interested in buying another company
to better compete against Hewlett-Packard.Lexmark’s biggest
shareholder has long been listed Goldman Sachs, with a nearly 10%
stake, but hedge funds including Renaissance Technology, DE Shaw and
Arrowstreet have bought a combined 13% stake this year. Others have
smaller positions.Xerox, which acquired listed Global Imaging Systems
of Florida for USD 1.5bn in the first quarter, its biggest-ever
acquisition, does not plan to make such large ones ahead, CEO Mulcahy
said.
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