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Atos to Buy Xerox's Information Technology Outsourcing Business

Published :2014-12-19

Xerox has announced the sale of its information technology outsourcing business for about $1 billion to the French technology company, Atos.

This sale is the latest move for Xerox which has been transformed under the leadership of Ursula M. Burns.  The company which was earlier known for making bulky photocopiers has now become a major provider of various business services.

Atos will add the unit which includes 9,800 employees in 45 countries to its large outsourcing business.

President of Xerox Services, Robert Zapfel said that it’s an important strategic move for them. For Xerox, this is a chance to really focus on really growing the businesses where they are strongest.  He further added that they had a lot of success with the I.T. outsourcing business, but they were subscale versus the larger players.

At closing, Xerox will receive $1.05 billion with the potential for an additional $50 million. This deal is expected to close in the first half of 2015.

Mr. Zapfel said that they think of Xerox as a services provider that drives productivity for their clients. They are an enabler for a large portion of the Fortune 500.

This year, Xerox stock has risen approximately 14 percent, giving the technology stalwart a market value of around $15 billion. This year, Atos has fared less well, with its stock down around 9 percent, giving it a market value of approximately $6 billion.

Xerox will be able to report the unit as a discontinued operation; will ease the quarterly comparisons during earnings. The unit is expected to represent approximately $1.3 billion in revenue and $115 million in profit for the full year.

Mr. Zapfel said that the unit will do better by being part of the Atos. I.T. outsourcing team. Xerox also said that it would allocate $1 billion for share buybacks in 2015 and set aside $900 million for acquisitions. 

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