By Ben Levisohn

Xerox stock was rising Monday morning after it agreed to buy privately held Lexmark, which raises the question: Lexmark still exists?

It appears it does -- and its acquisition has sent Xerox stock up 9.1%, to $9.15, in premarket trading Monday. The deal is valued at $1.5 billion including debt. "This acquisition will strengthen the Xerox core print portfolio and build a broader global print and managed print services business better suited to meet the evolving needs of clients in the hybrid workplace," the company said in its press release announcing the deal, while calling Lexmark "a valuable partner and supplier to Xerox."

The deal comes at a cost for Xerox investors. The company announced that it would cut its annual dividend from $1 a share to 50 cents a share. The stock had a dividend yield of nearly 12% before the announcement, so that should get cut in half.

Xerox is known for its once ubiquitous copy machines -- there's a reason its name became a verb used interchangeably with photocopying -- but the digital age hasn't been kind to it. It closed as high as $167.79 in 1999 and had a market value of $42 billion -- or $80 billion in 2024 dollars, according to the Bureau of Labor Statistics inflation calculator -- before getting crushed in the dot-com bust and never really recovering. Lexmark, known for its printers, was spun out of IBM in 1991, before being taken private in 2016.

Just seven analysts cover Xerox stock, according to FactSet, which means at least a few people still own Xerox shares. The most recent Barron's story was from June 2024, when it was initiated with a Sell rating at Citigroup. As for Lexmark, it's a brand we hadn't thought about in a while.

But it still exists enough to be acquired.

Write to Ben Levisohn at ben.levisohn@barrons.com

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December 23, 2024 08:55 ET (13:55 GMT)

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