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Xerox earmarks $100 million for M&A activity this year

Xerox has set aside $100 million for mergers and acquisitions this year, looking to convert more multibranded dealers here and abroad into Xerox-exclusive agents and to be more involved with new technologies, according to Chief Financial Officer Bill Osbourn.

During the Norwalk-based firm’s fourth-quarter conference call on Jan. 31, Osbourn said that Xerox will have $1 billion to $1.2 billion in cash available for capital allocation in 2017, with about $100 million of that earmarked for M&A. The company’s Global Imaging Systems business unit will continue to acquire independent, multibranded resellers and turn them into “mono-branded” resellers.

“Historically we have had very good returns in (buying multibranded resellers),” Osbourn, who joined Xerox in December, said during the call. “We have paid a multiple in the range of one times revenue and we look, to the extent that they are the right opportunities in doing those type of acquisitions in 2017 and beyond, not only in the U.S. but internationally.”

Xerox had set aside $100 million to $400 million for M&A activities in 2016, when its acquisitions included Dallas-based ASI Business Solutions for an undisclosed amount.

During the same call, CEO Jeff Jacobson said that acquiring technologies or businesses that would help Xerox get into the $60 billion to $65 billion commercial offset print and packaging space could be a priority this year, as part of the company’s focus on moving beyond printing on paper to printing on packaging, plastics and electronics.

Xerox’s fourth-quarter 2016 earnings of $181 million – which excluded results for its recently spun-off business process outsourcing company Conduent – were down 29 percent year-over-year, while revenue of $2.7 billion represented a 7 percent decline. The company laid off some 800 people during the quarter at a cost of $57 million in severance, and paid another $26 million to withdraw from the lease on its corporate jet.

The costs of spinning off Conduent came to $159 million in 2016, and is expected to cost another $15 million this year, the company said.

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