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Lexmark Beginning to Look At Alternatives For Future
October 26, 2015
Last Friday, Lexmark announced that their Board of Directors has authorized the Lexington, KY-based OEM to explore “strategic alternatives to enhance shareholder value” In other words, the company is looking to potentially find a suitable buyer to come in an absorb the various businesses that operate under the Lexmark umbrella.
Lexmark, overall, according to the release has grown to become a $3.7 billion global technology company with $1.5 billion of that comprised of Higher Value Solutions including Enterprise Software and Managed Print Services. Enterprise Software, which is driven by the acquisition of Perceptive Software in 2010 provides the company with an annualized revenue rate of roughly $700 million. Managed Print Services, which has gained increasing importance not only for Lexmark but for the industry as a whole, has a 15-year streak of revenue growth. Additionally, the company boasts a $2.4 billion annuity revenue base from laser supplies, extended warranties, software maintenance, and software subscriptions .
To aid in the process of examining strategic alternatives, the Board of Directors has formed an independent group of directors. Among those helping the Board are financial advisor, Goldman, Sachs, & Co., transaction and advisory services firm Ernst & Young LLP, and the law firm of Wachtell, Lipton, Rosen, and Katz. To this point, no decisions have been made nor does the beginning of this process mean that the at the end there will be a transaction entered into or consummated.
Lexmark notes in the release that it is the only communication the press will receive about the process until such time as a transaction occurs or the company completes its analysis of strategic alternatives. Currently, no specific timetable exists for length of this process.
Jean-Paul Montupet, lead director of the Lexmark Board of Directors, said "We are extremely proud of what the Lexmark management team and employees have accomplished in the transformation of Lexmark. While the Board is encouraged by the company's future prospects, the Board does not believe Lexmark's current share price fully reflects the intrinsic value created by the company, and the Board has concluded it is appropriate to explore strategic alternatives as the next step to unlock this value."
Paul Rooke, Lexmark's chairman and chief executive officer, states "Our Board of Directors and management are committed to taking the appropriate actions to enhance value for Lexmark's shareholders. Through the growth of the company's Higher Value Solutions revenue to approximately $1.5 billion annually and the creation of a growing and profitable Enterprise Software business, Lexmark has been able to successfully evolve from an imaging and output provider to a global technology company that provides hardware and software solutions and services to businesses worldwide.