A Chinese consortium led by Apex Technology and PAG Asia Capital has snapped up print giant Lexmark in a deal valued at $3.6 billion including debt, as Chinese investors continue their outbound buying spree snapping up brand names all over the world.
The all-cash transaction values Lexmark at $40.5 per share, representing a 16.8% premium to its Tuesday closing share price of $34.66 in New York, the company said late on Tuesday in a statement.
The takeover is the latest in a string of cross-border acquisitions by Chinese companies that are actively expanding overseas and purchasing established foreign assets for their know-how and new markets amid China's economic slowdown.
Chinese buyers have splurged $104 billion on 251 foreign deals so far this year, with 66 tech-related deals contributing $17.5 billion, according to data provider Dealogic. The total volume so far this year is also close to last year’s record annual volume of $107 billion.
The Lexmark takeover is also the second largest Chinese outbound acquisition in the tech sector since 2013. The only deal bigger, according to Dealogic, is the $6 billion takeover by Tianjin Tianhai Investment, a subsidiary of Chinese conglomerate HNA Group, of US technology distributor Ingram Micro. That deal, agreed in February, has not yet been completed.
Besides Apex Technology, a Shenzhen-listed Chinese manufacturer of inkjet and laser cartridge components, and PAG Asia Capital, the private-equity buyout arm of PAG, a Hong Kong-based investment firm, the consortium also includes Legend Capital, the venture capital unit of Legend Holdings.
Like its peers in the printing industry, Lexmark has seen difficult times due to weakened demand for printing products as consumers shift from using personal computers to mobile devices and digital documents.
Lexmark reported $3.55 billion of revenue last year, down 4.5% from one year earlier, while its net loss of 2015 reached $40.4 million, compared with net income of $80 million year-on-year.
In October, the company said it had hired Goldman Sachs to help explore “strategic alternatives”, including a sale.
Shares in Lexmark gained 11.3% to $38.57 in Tuesday’s after-hours trading on the news of takeover.
“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,” Lexmark chairman and chief executive officer Paul Rooke said in the statement.
The acquisition, which is subject to antitrust clearance in various jurisdictions as well as approval from the Committee on Foreign Investment in the US (CFIUS), is expected to be completed in the second half of 2016.
After the close of the deal, Lexmark will keep its headquarters in Lexington, Kentucky, and Paul Rooke will stay at the helm of the company, according to the statement.
The deal will be financed through equity contributions from the consortium and debt financing.
Lexmark’s sole financial adviser was Goldman Sachs while Wachtell, Lipton, Rosen & Katz was the company’s legal counsel.
Moelis advised the consortium financially along with Skadden, Arps, Slate, Meagher & Flom and King & Wood Mallesons as legal counsel.
