Xerox Corp. said Monday, September 28, that it plans to acquire Affiliated Computer Services Inc., the parent company of Buck Consultants, in a cash-and-stock transaction valued at $6.4 billion.
The deal, which is expected to close in January, would nearly triple Xerox’s revenue from services to approximately $10 billion from $3.5 billion in 2008, the Norwalk, Connecticut-based document management technology and services firm said in a statement.
No plans have been made to spin off Buck Consultants after the acquisition, a spokeswoman for Dallas-based ACS said.
“It is a key part of our human capital management solutions,” she said. “We will continue to operate business as usual” until the deal closes.
ACS provides business process outsourcing services to 1,700 federal, state, county and local governments, as well as to a host of private companies. Xerox provides office and information technology equipment to employers.
In the statement, Xerox CEO Ursula Burns described merging the two companies’ operations as “complementary” because Xerox provides the technology while ACS provides services to businesses.
“By combining Xerox’s strengths in document technology with ACS’ expertise in managing and automating work processes, we’re creating a new class of solution provider,” Burns said. “A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.”
New York-based Buck Consultants, which began as an actuarial consulting firm 1916, has operated as an independent subsidiary of ACS since 2005. It provides human resources consulting services addressing employee health and wellness, HR technology and administration, and retirement plans. Its clients include 45 percent of Fortune 100 companies.
The transaction, which has been approved by the Xerox and ACS boards of directors and an ACS special committee, is expected to close in the first quarter of 2010. ACS will operate as an independent organization and initially will be branded ACS, a Xerox Co. It will be led by Lynn Blodgett, who will report to Burns.
The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of ACS and Xerox stockholders. Obtaining domestic and foreign regulatory approvals will be a necessary part of closing the deal.
The Xerox-ACS deal comes on the heels of another proposed merger in the IT services business. Last week, Round Rock, Texas-based computer manufacturer Dell Inc. said it would acquire Perot Systems Corp. of Plano, Texas, for $3.9 billion.
Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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