Xerox in talks to buy RR Donnelly

Bloomberg TV, which “broke the news” on 12 July, said that Xerox would look to acquire RRD, and then merge parts of it within the two newly created companies Xerox is forming.

Shares of Xerox rallied by 3% after a report that it may be pursuing a merger of its copy business unit. Pre-Drupa, Xerox had announced that it will split into two publicly traded entities - one selling and managing office equipment and the other providing office services.

At the close of trading on Monday, 12 July, Xerox had a market capitilisation of USD 9.6bn, compared with RRD at USD 3.9bn.

RR Donnelly had sales of USD 11.6bn last year. Interestingly enough, RRD shares jumped 12 per cent on news of the potential sale to Xerox.

Before the Xerox approach RR Donnelly was planning on splitting its business into three separate parts, with an October timeline.

Xerox has sales of USD 18bn, of which USD 11bn is from its technology business and USD 7bn from its business processing outsourcing service.

If the talks are successful Bloomberg said that Xerox would buy RRD and merge some of its operations with its post-split USD 11bn document technology and graphics business, Xerox Corporation, and the rest with its USD 7bn BPO business, Conduent.

At this stage it is unclear if the reported talks are related to the entire RR Donnelley business or just the RR Donnelley & Sons Company operation.

A leading printer in India spoke to PrintWeek India, “If this sort of deal happens, then this kind of vertical integration is good news for Xerox, since it helps them establish a stronger base in India. Machine sales in the high end and medium segment for toner devices have taken a dip in the past five years. Also RR Donnelley gets a footprint in India where they have tried to operate and consolidate their operations.” Another printer spoke about "a conflict of interest" and may put off potential customers as far as buying their kit goes.

Xerox officials are not commenting about the talks.