Xerox, the office-supply company whose name used to be a verb, is acquiring Affiliated Computer Services Inc., which calls itself “the world’s largest diversified business process outsourcing firm” for $6.4 billion.
Xerox CEO Ursula Burns (l) and ACS President and CEO Lynn Blodgett (r) ACS performs a wide variety of services for numerous business and government clients, including automated traffic enforcement in several cities.
“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,” said Ursula M. Burns, Xerox chief executive officer. “A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.
Xerox said it will achieve significant incremental revenue growth by leveraging Xerox’s strong global brand and established client relationships to scale ACS’s business in Europe, Asia and South America. In addition, Xerox will integrate its intellectual property with ACS’s services to create new solutions for end-to-end support of customers’ work processes.
Xerox expects to achieve annualized cost synergies that will increase to the range of $300 million to $400 million in the first three years following the close of the transaction.
The transaction, which has been approved by the Xerox and ACS boards of directors and ACS special committee, 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. It will continue to be led by its CEO, Lynn Blodgett, who will report to Burns.
The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of ACS and Xerox stockholders.