Sunday, December 21, 2014

Xerox to sell IT outsourcing arm to Atos for $1.05 billion

Xerox to sell IT outsourcing arm to Atos for $1.05 billion
Xerox Corp, best known as a maker of printers and copiers, reported weaker-than-expected quarterly revenue.

Xerox Corp said it has agreed to sell its information technology outsourcing arm to French IT services firm Atos SE for $1.05 billion, sending its shares up almost 4% in late trade on Thursday.

By divesting the slower-growing unit which became part of Xerox as part of the 2009 acquisition of ACS, Xerox can now focus on building up the faster-growing units, business process outsourcing and document outsourcing, Robert Zapfel, president of Xerox services business said. The IT outsourcing business generated $376 million in the quarter ended September 30.

"Xerox's ITO business includes about 9,800 employees in 45 countries," the company said in a statement. The unit's leadership team will join Atos.

In Paris, Atos said the deal was expected to close in the second quarter of 2015 and would boost its earnings per share by 10% as early as the first year.

It said the move would also triple its size in the US which would represent its largest market. Atos also said in a statement it would pay $950 million in cash for the business plus $100 million representing tax benefits, and would pay an extra $50 million subject to the condition of certain assets.

Xerox has spent roughly $300 million this year, including a deal in May to acquire ISG Holdings for $225 million, to expand its insurance solutions. It also bought smaller software companies, Consilience Software and Intrepid Learning, in the past few months.

"This will provide incremental cash which gives us more flexibility to do more acquisitions," Zapfel said in an interview.

Xerox, best known as a maker of printers and copiers, has been focusing on services to offset a drop in printing by companies and as personal computing moves to tablets and smartphones.

Xerox forecast adjusted earnings of 28 cents to 30 cents per share for the current quarter ending December 31, from 30 cents to 32 cents per share it expected earlier. Analysts on average were expecting a profit of 31 cents, according to Thomson Reuters I/B/E/S.

Xerox also said it now expects adjusted full-year 2014 earnings per share of $1.04 to $1.06, below analysts' average estimates of $1.12, according to Thomson Reuters I/B/E/S. Shares of the company closed at $13.89 on the New York Stock Exchange.

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