Lexmark and Xerox: A Tale of Two Cities?

It was the best of times, it was the worst of times. Ricoh/Ikon, Xerox/Global...

By Gareth P. Tenet, 📜🤝🚀

It was the best of times, it was the worst of times for the office technology industry. The machines still hummed, but the pages they churned out grew fewer with each passing year. Businesses wrestled with the seductive allure of digital transformation, while the stalwarts of printing and document management fought to adapt—or risk becoming relics.

At the center of this shifting landscape stood Lexmark and Xerox, two names synonymous with the evolution of office technology. Their intertwined story begins in 2016, a year of great ambition for Lexmark. Purchased by a Chinese consortium led by Apex Technology for $3.6 billion, Lexmark was heralded as a cornerstone for global expansion. The deal promised untold growth in the Asia-Pacific market, unlocking innovation and investment that seemed to guarantee a bright future.

But beneath the optimism lay challenges. Regulatory scrutiny from U.S. agencies loomed, reflecting a world where economic alliances were both bridges and barriers. Lexmark’s leaders assured continuity—its Lexington, Kentucky, headquarters would remain intact, its commitment to customers undiminished. And for a time, it worked.

Fast forward to 2024, and the echoes of that deal had faded into a different tune entirely. Xerox, grappling with five consecutive quarters of declining revenue and the seismic shifts of hybrid work, made a bold move: acquiring Lexmark for $1.5 billion.

It was a stark contrast to 2016’s hopeful exuberance. This was no bid for expansion; it was a battle for survival, for relevance. Xerox was no stranger to reinvention, and in Lexmark, it saw not just a company, but a bridge to the future. A bridge lined with managed print services, AI-driven insights, and a new vision for how offices—hybrid, decentralized, digital—would operate.

The valuation told its own story. Lexmark, once worth over $3 billion, now traded hands for less than half that amount. Was it a loss? Perhaps. But it was also a testament to the unforgiving speed of change in an industry where hardware was no longer king. Services, solutions, and integration had claimed the throne.

For Xerox, the stakes could not have been higher. Integrating Lexmark’s capabilities meant more than adding a line of printers; it was about building an arsenal of tools to address the complexities of modern work. Steve Bandrowczak, Xerox’s CEO, declared this union a step toward creating “one stronger organization.” That strength would be tested as Xerox aimed to save $200 million annually through streamlined operations and expanded reach to over 200,000 clients across 170 countries.

But even as this merger promised synergy, challenges loomed large. Could two companies with such distinct legacies find common ground? Could they pivot fast enough to meet the demands of a digital-first world where paper was no longer the default?

The answer lies in the balance of these times—the best and the worst. For every new opportunity, there is a challenge. For every innovation, a disruption. Lexmark and Xerox, bound by ambition and necessity, find themselves at the intersection of what has been and what could be.

As the dust settles, their journey serves as a alarming tale and an inspiring blueprint. Success in our industry is truly about selling machines but about selling solutions, about being not just relevant, but indispensable. For those of us watching, their path offers a simple lesson: in times of upheaval, it is not the strongest who thrive, but the most adaptable.

What lies ahead for Xerox and Lexmark?

The answer will shape destinies, and reflect the industry itself.

- gpt 📜🤝🚀

A Timeline

1. 2016: The Chinese Acquisition Lexmark, a company renowned for its stronghold in managed print services (MPS), was acquired by a Chinese consortium led by Apex Technology and PAG Asia Capital for $3.6 billion. This move was framed as a growth opportunity, enabling Lexmark to leverage the consortium’s resources to expand its footprint in the Asia-Pacific market. The deal, however, faced regulatory scrutiny in the U.S., underscoring the complexities of global business.
2. Post-Acquisition Focus After the acquisition, Lexmark retained operational independence with its headquarters in Lexington, Kentucky. The company sought to build on its legacy in managed services while integrating new resources from its parent consortium.
3. 2024: Xerox Steps In Fast forward eight years, and the landscape had shifted dramatically. Print volumes were declining, and the hybrid workplace had changed how businesses operate. In this context, Xerox announced its intent to acquire Lexmark for $1.5 billion. This move was not just a bid to scale operations but also a strategic pivot toward bolstering Xerox’s MPS offerings and embracing advanced technology integrations.
4. Strategic Integration The Xerox-Lexmark deal brought together two industry leaders with complementary strengths. With a combined customer base spanning over 200,000 clients across 170 countries, Xerox aimed to leverage synergies and achieve cost savings of $200 million annually. The acquisition also aligned with Xerox’s “Reinvention” strategy, focusing on the hybrid workplace and digital solutions.

A Story of Two Eras

These two pivotal moments in Lexmark’s history highlight a stark contrast between the eras. In 2016, the focus was on globalization and leveraging emerging markets. By 2024, the industry had shifted its priorities to resilience, service-led strategies, and innovation. Lexmark’s valuation, which dropped from $3.6 billion in 2016 to $1.5 billion in 2024, underscores the industry’s challenges and the declining emphasis on hardware.

Xerox’s strategic play demonstrates its commitment to staying ahead in a rapidly changing market. Steve Bandrowczak, Xerox’s CEO, expressed the significance of this move, emphasizing the importance of creating “one stronger organization” capable of meeting the evolving demands of the hybrid workplace. This sentiment reflects the broader trend of companies shifting from transactional selling to integrated solutions.

Challenges and Opportunities

The merger’s success will hinge on the seamless integration of two companies with distinct histories and cultures. The broader challenges of digital transformation and sustainability also loom large. However, this partnership holds promise for delivering innovative solutions and tailored services to businesses navigating a complex, digital-first world.