Xerox Finalizes ACS Buy-out, Creates Business Process Outsourcing Giant

The acquisition by Xerox (site) of business process outsourcing giant ACS has been given final approval after a majority of shareholders from both companies gave the go-ahead.

While the financial details of the deal have not been made public, at the time of the original announcement in September of last year, we reported that overall it was a US$ 6.4 billion cash deal that will see Xerox take on US$ 2 billion of ACS debt as part of the takeover.

It creates a US$ 22 billion global enterprise for document management technology and business process management.

ACS And BPO

ACS provides information technology services to industries including telecommunications, retail, financial services and education and after the takeover it is expected to operate as a stand-alone firm.

It is impossible to properly estimate ACS’ share of that market at the moment, but absolutely no one is disputing the fact that it is the largest provider of managed services to government with over 1,700 federal, state, county and local government contracts.

ACS will initially be branded ACS, A Xerox Company and will continue to be led by Lynn Blodgett, who has been elected by the Xerox Board of Directors as an executive vice president of the corporation. Blodgett will report to Ursula M. Burns, who is currently CEO of Xerox.

According to technology marketing consultancy IDC the closure of this deal is a real game changer.

Xerox is working aggressively toward becoming more focused on information management and business processes and less reliant on printed documents…With this acquisition, Xerox becomes a significant player, and has an opportunity for growth, in the growing business process outsourcing market,” said Angele Boyd, group vice president/general manager, document solutions, IDC.

Further Acquisitions?

The Wall Street Journal is reporting that Burns has said that Xerox will be looking at further acquisitions over the course of the year, but not as large as the ACS deal.

"Acquisitions in the last few years are the core piece of our strategy," she said. But deals in 2010 and 2011 are likely to be half the size or less of ACS, she said; "It's the kind of deal you only do every few years."

Reaction to the closure has generally been positive as it will give Xerox a footprint in a wider market, a market that is being dominated by Hewlett-Packard at the moment.

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