Lexmark to follow Ingram into Chinese ownership

US print vendor says deal with Chinese consortium will help it grow after it concludes strategic review process

Print vendor Lexmark has become the latest US tech firm to sell up to Chinese investors in a move it claims will benefit partners.

The NYSE-listed firm has agreed to be acquired by a consortium led by Chinese cartridge manufacturer Apex Capital and private equity firm PAG Asia Capital for $3.6bn (£2.5bn).

The deal, which ends Lexmark's six-month search for a buyer, comes hot on the heels of Ingram Micro's proposed $6bn takeover by Chinese conglomerate HNA, which has been questioned by some analysts.

Lexmark claimed the move will benefit customers and partners by boosting its growth, and help it penetrate the Asia-Pac market.

In its last financial year, Lexmark saw revenues fall four per cent to $3.71bn, reflecting its ongoing exit from inkjet.

Its two business groups, Imaging Solutions and Services and Enterprise Software, as well as its regional and country operations, are expected to continue unaffected, the vendor said.

James Kight, managing director of Lexmark partner Printerland, welcomed the deal, saying the investment could boost innovation at the vendor.

"It was always on the cards that Lexmark was going to get taken out, and I think there will be a lot more consolidation in the print industry as it's a tightening market," Kight said.

"Lexmark's technology is streets ahead. Someone putting in an investment is welcome, as you need investment to stay at the forefront.

The deal marks the culmination of an "extensive review process" launched by Lexmark in October, and Kight was not surprised by the identity of its buyer.

"Private equity is not something to be fearful of and there aren't many [trade] players in the market that could have taken on Lexmark," he said. "I think they will run with it as is, because if it's not broke, don't fix it; they are buying a superb firm."

Lexmark chief executive Paul Rooke said: "As part of the consortium, Lexmark will be able to reach the next level of growth and innovation, to the benefit of our customers, business partners and suppliers, faster than we could achieve on our own.

"With the consortium's resources, we will be able to continue to invest in and grow the business to more fully penetrate the Asia-Pacific market for hardware, software and managed print services."

The deal, which represents a 30 per cent premium on Lexmark's share price before it announced the strategic review last October, is set to close in the second half, pending regulatory approval.

Weijian Shan, CEO of PAG, said: "Lexmark is a recognised global leader in printing technology and enterprise software, with a proven track record of performance, a consistent annuity-based business model and a talented workforce.

"We look forward to working with Lexmark's management team and focusing on expanding the business in the Asia-Pacific region."