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Ninestar to Sell Lexmark to Xerox at a Fraction of Initial Valuation
Deal Overview
China-based Ninestar Corp plans to sell printer and printing software maker Lexmark International II to Xerox in a deal estimated to be worth between $75 million and $150 million. This valuation is significantly lower than the $1.5 billion figure Xerox had announced in December.
Revised Transaction Valuation
Ninestar stated in a stock exchange filing that the sale price was determined based on Lexmark’s latest operational status. The price range of $75 million to $150 million is far below what Xerox had initially disclosed when announcing the acquisition.
Previous Acquisition Details
In December, Xerox revealed it had agreed to buy Lexmark in a deal valued at $1.5 billion, which included assumed liabilities from Ninestar, private equity firm PAG, and Shanghai Shouda Investment Centre. The acquisition was expected to enhance Xerox’s presence in Asian markets.
Financial Adjustments
According to Ninestar’s December filing, the initial valuation of $1.5 billion was calculated based on the company’s adjusted net operating capital, estimated cash on the transaction day, and deductions for Lexmark’s debt and transaction fees.
Lexmark’s Ownership History
Originally formed as a spin-off from IBM in 1991, Lexmark was sold in 2016 to a group of Chinese investors for $3.6 billion. The upcoming sale to Xerox would return Lexmark to U.S. ownership.
Xerox’s Strategic Expectations
Xerox had anticipated that acquiring Lexmark would provide immediate profitability benefits and yield more than $200 million in annual cost savings. Expected reductions in marketing and real estate expenses were among the key financial advantages highlighted in the December announcement.
The drastic drop in Lexmark’s sale price raises questions about its financial health and market position while presenting Xerox with a potentially strategic acquisition at a significantly reduced cost.
“Ninestar to Sell Lexmark to Xerox at a Fraction of Initial Valuation” “Ninestar to Sell Lexmark to Xerox at a Fraction of Initial Valuation”