Agreed to buy Affiliated Computer Services Inc. for $6.4 billion in its biggest purchase, shifting to computer services as sales of its traditional printing equipment decline. The transaction will help triple sales from services to about $10 billion, Xerox said today in a statement. The total price of the cash-and-stock deal is about 34 percent more than Dallas-based Affiliated Computer’s closing price Sept. 25. The acquisition is Chief Executive Officer Ursula Burns’s first since taking over the world’s largest maker of high-speed color printers in July. Burns’s predecessor, Anne Mulcahy, helped Xerox avoid bankruptcy this decade by paring debt, exiting unprofitable businesses and shedding jobs.
Affiliated Computer jumped $7.43, or 16 percent, to $54.68 on the New York Stock Exchange at 9:52 a.m. Xerox, based in Norwalk, Connecticut, fell $1.30, or 15 percent, to $7.67, the biggest intraday drop since March. The stock had climbed 13 percent this year before today. The transaction helps Burns expand into a market Xerox values at about $150 billion and gives her a foothold in managing administrative operations for multiple arms of the U.S. government. “With this combination, our tool box just got a lot bigger,” Affiliated Computer CEO Lynn Blodgett said in an interview. Blodgett will run the business as a unit of Xerox and report to Burns, 51.
Almost 90 percent of Affiliated Computer’s new business contracts last year came from outsourcing, or managing operations for other companies. Total sales rose 5.9 percent to $6.5 billion in the year ending June 30. Xerox has posted sales declines for three straight quarters, with analysts projecting a fourth, according to the average of estimates compiled by Bloomberg. Global spending on technology products will fall 8 percent this year, Goldman Sachs Group Inc. said this month. Mulcahy, who took over in 2001, cut at least 20,000 jobs to revive Xerox after the bursting of the technology bubble at the start of the decade left Xerox with mounting debt and its first annual loss in five years. Under Mulcahy, Xerox stopped making personal copiers and started focusing on laser printers, as well as color printing.