San Francisco - Xerox is to buy technology outsourcing firm Affiliated Computer Services for 6.4 billion dollars in a bid to offer business customers a wide range of computer services as well as its traditional printing and copying equipment. The legendary technology company, which played a major role in developing modern computer systems before hitting hard times in the 2000 dot-com bust, said Monday that the acquisition will boost its revenues to about 22 billion dollars. The cash and stock deal, which represents a 34-per-cent premium on Affiliated Computer, will also boost Xerox's workforce to 128,000 from its current level of 54,000 employees.
The deal is the biggest-ever acquisition by Xerox and comes just three months after Ursula Burns took over the firm to become the first African-American woman to head a Fortune 500 company.
The move comes in the week after Dell announced a 3.9-billion- dollar bid to purchase technology services company Perot Systems. HP and IBM also have long-term strategies to build their technology consulting businesses where steady income derived from monthly service contracts can help offset the low margins and volatility of hardware sales.
The deal is expected to close in the first quarter of 2010. It will yield annual cost savings of 300 million to 400 million in the first three years, and triple its revenue from service to 10 billion dollars, Xerox said.
"By combining Xerox's strengths in document technology with ACS's expertise in managing and automating work processes, we are creating a new class of solution provider," said Burns, Xerox chief executive officer. "A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth."
