Xerox Acquires Information Technology Services Company
$415 Million Acquisition of XLConnect Advances Strategy Of Global Growth in Document Services Business
March 5, 1998 08:59 AM
STAMFORD, Conn. and EXTON, Pa., March 5 /PRNewswire/ -- Xerox Corporation XRX , accelerating its strategy to achieve high growth through networked document solutions, today announced the $415 million acquisition of XLConnect Solutions, Inc. XLCT , an information technology services company, and its parent company, Intelligent Electronics, Inc. INEL .
"This acquisition strengthens Xerox' worldwide services capabilities to design, build and support networks that implement enterprise-wide document solutions for our customers," said Xerox Chairman and Chief Executive Officer Paul A. Allaire. "In addition, XLConnect's expertise complements and extends our highly profitable document services outsourcing business, which grew 58 percent in 1997, to $2 billion."
XLConnect XLCT , with 1,500 employees, 27 locations throughout the United States and 1997 revenue of $135 million, provides network management, consulting, design, and integration services for medium and large companies.
"The growth in network computing has led to a tremendous increase in both the volume of digital documents and the convergence of document management and communication with other technologies, including imaging, voice and data," said Xerox President and Chief Operating Officer G. Richard Thoman. "This acquisition will infuse Xerox with hundreds of talented and trained network specialists who will design and build publishing, workflow and other document solutions, including Internet-based solutions, for our customers. We believe the experts at XLConnect will help us develop and deliver Xerox document solutions for virtually any networked environment."
Xerox digital printers, copiers and other document products, operating in conjunction with a suite of document management, workflow and imaging software, create networked business solutions that improve productivity in the office, print shop and production-printing environments. With more than 40 percent of Xerox revenues derived from digital products and services, the purchase of XLConnect provides Xerox strategic access to a nationwide information technology services capability, including applications developed by XLConnect, that position Xerox XRX at the forefront of the networked enterprise.
Timothy Wallace, currently president and chief operating officer of XLConnect, will become president and chief executive officer of the newly acquired company. XLConnect's senior management team will remain with the company.
XLConnect will have immediate access to Xerox' customer base, sales force, products and outsourcing capabilities. "XLConnect's customers have long recognized our commitment to deliver best-of-breed technology solutions and depend on our expertise to provide real return for their IT investment," said Wallace. "As part of the Xerox family, we will continue that commitment with the results-oriented focus that our customers have come to expect from XLConnect. Xerox' credibility and stability, along with the obvious synergies with Xerox' successful outsourcing business, will significantly enhance our ability to compete in the fast-growing market for information technology services."
According to Barry D. Romeril, Xerox executive vice president and chief financial officer, "The earnings impact in 1998 will be about neutral, with a positive contribution in 1999 and thereafter."
Under the agreement for an all-cash transaction, Xerox will acquire Intelligent Electronics INEL , which holds an 80 percent interest in XLConnect. In addition, Xerox will acquire the 20 percent of XLConnect shares publicly held. Xerox will pay $7.60 for each share of Intelligent Electronics stock and $20 for each share of XLConnect stock. The transaction must be approved by the stockholders of both Intelligent Electronics and XLConnect. Closing is subject to customary closing conditions, including regulatory approval.
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