08:41 AM EST, 12/23/2024 (MT Newswires) -- Xerox (XRX) will acquire laser printer and imaging products manufacturer Lexmark International in a deal worth $1.5 billion, including debt and other liabilities, to boost its core print portfolio, the firm said Monday.

The digital print company will purchase Lexmark from Ninestar, PAG Asia Capital and Shanghai Shouda Investment Centre. Xerox is set to pay for the deal through cash on hand and committed debt financing. The stock was up more than 7% pre-bell Monday.

"Our acquisition of Lexmark will bring together two industry-leading companies with shared values, complementary strengths, and a deep commitment to advancing the print industry to create one stronger organization," Xerox Chief Executive Steve Bandrowczak said in a statement. "By combining our capabilities, we will be better positioned to drive long-term profitable growth and serve our clients, furthering our reinvention."

The transaction, which requires regulatory clearance and approval from Ninestar's shareholders, is expected to be completed in the second half of next year. Both companies will maintain their current operations and work independently until the deal closes.

Xerox expects Lexmark to strengthen its ability to serve A4 color paper customers and diversify its distribution and geographic footprint, including the Asia Pacific region. The new business will have more than 200,000 clients with 125 manufacturing and distribution facilities in 16 countries.

The deal should immediately bolster per-share earnings and free cash flow, as well as generate cost synergies of more than $200 million within the first two years of completion, according to Xerox. The company expects the transaction to accelerate its objectives of stabilizing revenue and hitting double-digit adjusted operating income.

Xerox's board of directors also approved a reduction in the company's annual dividend to $0.50 per share from $1 in relation to the financing of the deal. The lowered dividend, which provides the company incremental capacity to reduce debt, is expected to be declared in the first quarter of 2025.