Is it another End of an Era? As Lexmark is Bought by Chinese group for $3.6bn

Lexmark, the global printing and software company, has agreed to be sold to a consortium led by Apex Technology of China and PAG Asia Capital, a private equity firm, for $3.6 billion, including debt.

Lexmark had been looking into strategic alternatives for a while. The consortium buying it, which also includes Legend Capital Management, a venture capital firm, will pay $40.50 a share in an all-cash transaction. Lexmark said the deal represented a 30 percent premium to its closing price on Oct. 21, when it became known that the company was looking into its options.

Lexmark said the deal would allow it to expand in Asia. “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,” Paul Rooke, Lexmark’s chairman and chief executive, said in a news release.

Jackson Wang, the chairman of Apex, added that the two businesses were likely to be complementary, as Apex manufactures parts for ink cartridges. “Apex has traditionally been successful in emerging markets and in cost-effective production,” Mr. Wang said in a news release. “We are excited to work alongside Lexmark as they continue to invest in advanced technologies and solutions to best serve their customers and business partners, while simultaneously pursuing untapped opportunities in emerging markets particularly in Asia for future growth.”

Lexmark said that it intended to keep its company headquarters in Lexington, Kentucky, and that Mr. Rooke would remain in his current role. Shares rose about 11 percent in after-hours trading.

Lexmark’s board has approved the transaction, but it is still subject to shareholder and regulatory approval from agencies including the Committee on Foreign Investment in the United States. The deal is expected to close in the second half of 2016.

Towards the end of 2015, it was reported by the Wall Street Journal that Lexmark was reviewing strategic options including a sale. It was said then that Lexmark was working with Goldman Sachs Inc on the process and could have possible buyers in private equity firms and other technology companies, the newspaper reported, citing people familiar with the matter. However it was flatly denied. "Lexmark does not comment on rumor or speculation," company spokesman Jerry Grasso had said.

Lexmark actually started showing distress as far back as 2013 when it announced that it'll quit the inkjet printer business as part of efforts to improve its profitability. It subsequently closed its inkjet supplies factory in Cebu, Philippines last year. After shedding 1,700 jobs, the company claimed it expected the move to save it $95m (£60m) a year in savings. It also intends to sell some of its 1,000 inkjet-related patents.

The firm will continued to sell laser printers and also focussed on its imaging software and document management services.