Xerox Gets Into Services with $6.4 Bln ACS Acquisition

By Geoff Duncan September 28, 2009

The trend has been developing for a while, but leave it to Xerox to put a nice big punctuation mark on things: the document management and printing company has announced a deal to acquire Affiliated Computer Services for some $6.4 billion in stock and cash. Xerox says the acquisition will enable the company to triple its services revenue to an estimated $10 billion next year, and comes as the company is seeing revenues decline from printer sales and equipment leasing.

“By combining Xerox’s strengths in document technology with ACS’s expertise in managing and automating work processes, we’re creating a new class of solution provider,” said Xerox CEO Ursula M. Burns, in a statement. “A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.”

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ACS employs nearly 75,000 people; its core business surrounds business process outsourcing—things like financial management, human resources, IT, transaction processing—as well as technical support and customer relations; most of its clients are government agencies and multinational corporations.

The ACS acquisition is just the latest in a wave of technology companies buying service-related businesses in order to create new revenue streams and bolster their bottom lines. Last year the world’s number one computer maker Hewlett-Packard took over Electronic Data Systems in a deal worth an estimated $13 billion, and just last well number-two computer maker Dell announced it was taking over Perot Systems for $3.9 billion.

The acquisition is Burn’s first major move since taking over the Xerox CEO role on July 1. Xerox plans to let ACS operate as an independent organization that will be run by ACS’s current CEO Lynn Blodgett; Xerox also plans to leverage some of ACS’s expertise to handle some of the company’s internal operations.

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Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…

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