Lexmark: A buyout target?
May 21, 2010 by Steve HannafordPosted in: Dealers & Channel, In this week's e-newsletter, Latest News & Views
Lexmark is a unique company in the office machine business. Not only is it a U.S.-based company that manufactures and sells printers (HP and Xerox are the others), it is the only one whose income comes almost exclusively from printers and print supplies.
Moreover, the company has rebounded from the worldwide recession with a totally reworked lineup of printers and printer-multifunctionals, color and black-and-white.
Every sign makes Lexmark the next major acquisition target in the industry — a company with worldwide reach, great products, a steady revenue stream from ink and toner and a necessity to go lean because of the recession.
In fact, Bank of America Merrill Lynch has rated it a top buyout candidate, according to a recent Fortune magazine article (“Is Lexmark the printing world’s most eligible bachelor?’)
Spun off from IBM 19 years ago, Lexmark has done very well on its own, going head-to-head with Hewlett-Packard and managing to hold on despite the dominating market position of its rival. For an acquirer, it offers a uniquely established product line ready to go. Lexmark executives may not want to be acquired, but if the money were right, its investors would be very happy to move.
Various Japanese copier companies might be interested. Ricoh and Konica Minolta come to mind, as companies with very strong high-end printers and copiers, but somewhat lacking in the area of office printers and compact MFPs. Ricoh especially has been on a buying spree and has an extensive dealer chain. It also already sells Lexmark machines through its InfoPrint subsidiary, a joint venture with IBM that Ricoh is about to own fully.
Buy the likeliest buyer is … Dell. Dell has resold Lexmark laser printers and MFPs for a decade, and has recently launched some of the newest Lexmark engines in a demonstration of its continuing interest (it also resells some Samsung models). The printers give Dell an important element its endless struggle for PC and server dominance with arch rival HP.
But the biggest deal right now, in terms of getting large corporate customers, is managed print services, an area in which HP (along with Xerox, Canon, and others) has a big head start. As Dell tries to expand its base, its ability to offer full corporate solutions is critical. And Lexmark, which now offers a large line of software-ready printers and MFPs could help Dell make an instant splash in that market.
Lexmark is a tempting target, for Dell and for others. With an improving business climate, we expect an announcement in the near future.
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May 21st, 2010 at 12:58 pm
One might argue the candidate to buy-out Lexmark would be Canon. Our blog posting on MPSInsights.com made a great case for it yesterday, http://www.mpsinsights.com/our-insights/lexmarks-suitor-who-could-it-be/