Xerox to Acquire Affiliated Computer Services

Its not like printing or copying will go away anytime soon, but that segment is in decline. The Xerox - ACS deal is a cash / stock transaction with the pricing of of 63.11 per share showing a 33 percent premium over Affiliated Computer Services' closing stock price on Friday.

Xerox shares fell 97 cents, or 10.7 percent, to $8, in pre-market trading. Meawnwhile, ACS shares jumped $9.10, or 19.3 percent, to $56.35.

In a statement, Xerox said the ACS acquisition will triple its services revenue to an estimated $10 billion next year. ACS is a $6.5 billion company which had fiscal '09 revenue growth of 6 percent and new business signings of $1 billion in annual recurring revenue.

The Xerox - ACS deal will give Affiliated Computer Services shareholders $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own. Of course, that drop in Xerox shares this morning automatically lowered the purchase price, a sad testament to these combo deals.

The Xerox - ACS deal also requires Xerox to take on $2 billion of Affiliated Computer Services debt and issue $300 million of convertible preferred stock to ACS's Class B shareholders.

The Xerox - ACS deal is new CEO Ursula Burns’s first since taking over Xerox, the world’s largest maker of high-speed color printers, in July. The acquisition of Affiliated Computer Services is expected to compete in the first quarter of 2010.