NORWALK, Conn. - Xerox (NASDAQ:XRX) Holdings Corporation (NASDAQ:XRX) has entered into an agreement to purchase ITsavvy, an Illinois-based IT service provider, for $400 million. The acquisition, which includes a $180 million cash payment and $220 million in secured promissory notes, is expected to close in the fourth quarter of 2024, pending regulatory approval.
John Bruno, president and chief operating officer at Xerox, stated that the acquisition is part of the company's strategy to focus on IT services and diversify revenue. He noted ITsavvy's successful track record and anticipated that their integration would accelerate growth in North America and the United Kingdom.
ITsavvy, founded in 2004, has grown to more than $400 million in revenue over the past twelve months, providing comprehensive IT services that support networking, cloud migration, and workplace productivity. Munu Gandhi, CEO of ITsavvy, expressed enthusiasm for joining Xerox and contributing to the expansion of Xerox IT Services in their current markets.
The acquisition aligns with Xerox's commitment to its Reinvention strategy and expanding its IT Services business. Xerox anticipates that the acquisition will immediately contribute to adjusted earnings per share and free cash flow. Further details will be discussed during the company's third quarter 2024 earnings call.
Xerox has a history of over 100 years and has evolved from a print technology leader to a provider of software and services for the hybrid workplace. The company aims to continue innovating and offering technology solutions that meet the needs of today's distributed workforce.
This press release contains forward-looking statements that involve risks and uncertainties, including global economic conditions, competitive pressures, and risks related to the company's Reinvention strategy. The actual results could differ materially from those anticipated. The company does not commit to updating these statements as more information becomes available.
The information in this article is based on a press release statement from Xerox Holdings Corporation.
In other recent news, Xerox Holdings Corporation announced the upcoming retirement of its Chief Financial Officer, Xavier Heiss, and the appointment of Mirlanda Gecaj as his successor. This leadership transition is part of Xerox's succession planning. The company's reports for the first and second quarters of 2024 showed a decline in earnings per share and revenues, with both quarters recording revenues of $1.5 billion and $1.6 billion respectively.
On the financial front, Xerox expanded its credit line from $300 million to $425 million in partnership with Citibank and other lenders, while also declaring dividends for both its common and preferred stock. Analyst firms Loop Capital and JPMorgan adjusted their stock price targets for Xerox, both reducing their targets and maintaining a Hold and an Underweight rating respectively. Citigroup initiated coverage on Xerox with a Sell rating.
These recent developments indicate significant changes within Xerox, including a leadership transition, a decline in revenues, strategic financial moves, and adjustments from analyst firms. Despite these challenges, Xerox remains committed to its reinvention strategy, aiming to improve its adjusted operating income by $300 million above 2023 levels within three years.
InvestingPro Insights
As Xerox Holdings Corporation (NASDAQ:XRX) moves forward with its acquisition of ITsavvy, investors should consider some key financial metrics and insights from InvestingPro.
According to InvestingPro data, Xerox's market capitalization stands at $1.3 billion, which puts the $400 million acquisition of ITsavvy into perspective as a significant investment for the company. This move aligns with an InvestingPro Tip suggesting that Xerox's net income is expected to grow this year, potentially bolstered by this strategic acquisition.
The company's revenue for the last twelve months as of Q2 2023 was $6.497 billion, with a revenue growth of -9.27% over the same period. This context underscores the importance of Xerox's diversification strategy through the ITsavvy acquisition, as it seeks to offset declining revenues in its traditional business lines.
Another noteworthy InvestingPro Tip indicates that Xerox is trading at a low Price / Book multiple of 0.55, which could suggest that the stock is undervalued. This metric may be particularly relevant as investors assess the company's growth potential following the ITsavvy acquisition.
It's worth noting that InvestingPro offers 11 additional tips for Xerox, providing a more comprehensive analysis for investors interested in delving deeper into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.