XEROX INTENDS TO BUY GLOBAL IMAGING SYSTEMS2 Apr, 2007
XEROX INTENDS TO BUY GLOBAL IMAGING SYSTEMS
STAMFORD, Conn., April 2, 2007 – Digital document imaging giants’ Xerox Corporation (NYSE: XRX) and Global Imaging Systems, Inc. (NASDAQ: GISX) today announced a definitive agreement for Xerox to acquire Global Imaging for $29 per share in cash. The total purchase price is expected to be about $1.5 billion.
Global Imaging, headquartered in Tampa, Fla., serves nearly 200,000 customers across the U.S. that generate for the company more than $1billion in annual sales. Through the acquisition, Xerox will benefit not only from increased equipment sales but also from the strong annuity stream that comes from the service and supplies to support these products. Global Imaging Systems focuses on small and mid-size businesses (SMB) through 21 regional core companies in the U.S. that sell and service document management systems such as printers, copiers and multifunction devices; network integration services; and electronic presentation systems. As an office technology dealer, Global sells products from various suppliers, none of which today include Xerox. In addition to its existing offerings, Global will start selling Xerox document management products following the close of the acquisition.
"Joining forces with Global Imaging Systems gives Xerox access to their extensive customer base and adds more than 1,400 'feet on the street' selling Xerox systems," said Anne M. Mulcahy, Xerox chairman and chief executive officer. "Xerox already has the industry's largest portfolio of document systems and services and the broadest U.S. distribution network," added Mulcahy. "With Global's localized expertise, experienced employees, and deep customer relationships, we'll increase our distribution to SMB customers by more than 50 percent at a time when our portfolio is at its strongest, earning an even greater share of the $16 billion SMB document market in the U.S."
Global Imaging started as a small distribution network and has grown into a national leader in providing office technology for SMB customers, like law firms, doctors' offices, accounting agencies, manufacturing companies and more. "Our customers require highly skilled sales representatives, reasonably priced quality technology, and superior service and support at the local level," said Tom Johnson, chairman and CEO of Global Imaging Systems, who founded the company in 1994. "As a Xerox company, we'll be better positioned to exceed our customers' requirements. Through the entrepreneurial spirit of our core companies, we'll provide one-stop shopping with Xerox as a leading brand supported by dedicated local service. Our stakeholders - customers, shareholders and employees - all benefit from this opportunity to be part of Xerox."
Global will over time add the full range of Xerox office and production products and supplies, including all Phaser(r) and WorkCentre(r) printers and multifunction systems that print, copy, fax and scan, as well as Xerox Nuvera(tm) and DocuColor(r) digital presses.
A recent report by industry research firm IDC cited Global for the success of its business model and growth strategy. "Global Imaging has continued to execute on a carefully planned growth strategy over the last couple of years," according to IDC analyst Keith Kmetz. "Global is relentless about focusing on service, chooses its acquisitions very carefully and has chosen a target market (mid-market companies) that is advantageous...Global has shown it can grow not only through acquisitions but also through effective management of existing businesses."
Once the transaction is complete, Global Imaging will operate as a wholly owned subsidiary of Xerox. Tom Johnson and Michael Shea, president and chief operating officer of Global, will continue to lead the company, reporting directly to Jim Firestone, president, Xerox North America. They will work in tandem with Xerox's North American Partners Group to align with Xerox's other SMB distribution channels. The acquisition of Global builds on Xerox's announcement earlier this year to increase its investments in sales channels by providing a broader array of offerings and revenue growth opportunities to value-added resellers and independent agents.
Global Imaging will keep its headquarters in Tampa, Fla. Its 4,500 employees will continue to operate as part of Global in the company's 21 regional core companies. Expected to close in May, this acquisition is Xerox's third in the past year.
Since its founding in June 1994, Global Imaging Systems, Inc. has acquired more than 80 businesses and has operations in 32 states and the District of Columbia. Global held its initial public offering in 1998. For the company's fiscal year that ended March 31, 2006, the last year for which results have been reported, Global delivered full-year revenue of $1.03 billion, an increase of 11 percent from the previous fiscal year. Income from operations was $114 million, and net income was $62 million, up 9 percent from fiscal year 2005.