Xerox to buy Global Imaging Systems

With acquisition, company hopes to better reach SMBs

Xerox Corp. will pay US$1.5 billion to acquire Global Imaging Systems Inc., an office imaging equipment reseller that focuses on small and mid-sized businesses, the companies announced Monday.

Xerox hopes to use the deal as a way to claim a larger share of the $16 billion market in the U.S. for small-and-medium size business (SMB) document handling, according to a statement from Anne Mulcahy, Xerox chairman and chief executive.

By making this deal, Xerox gains access to Global's 200,000 U.S. customers and its 1,400 sales representatives. And Global will finally begin to sell Xerox equipment. Until now, Global, of Tampa, Florida, has sold and serviced digital office equipment such as copiers, fax machines, printers and slide projectors built by suppliers including Konica Minolta Holdings Inc., Canon Inc., Sharp Corp., Panasonic Corp., Hewlett-Packard Co., IBM Corp., Microsoft Corp. and Sony Corp. That list of companies will now include Xerox.

When the deal is final, Xerox expects to employ all of Global's 4,500 employees, including its president, Tom Johnson, and chief operating officer, Michael Shea. Xerox expects the acquisition to close in May, following approval by Global shareholders and U.S. antitrust regulators.

The deal would be the company's third buyout in a year. Xerox paid $175 million for electronic discovery management firm Amici LLC in July 2006, and paid $54 million for marketing software firm XMPie in November.

Global has also consolidated many office equipment dealers in this fragmented sector. The company has acquired more than 80 businesses since it was founded in 1994 to serve small customers like law firms, doctors' offices and accounting agencies. Most recently, Global bought TML Enterprises Inc., an office technology dealer in Manssas, Virginia, on March 23. And Global bought Astro Business Technologies Inc. of Livermore, California, also an office technology firm, on January 31.

Global posted revenue of $1.03 billion for fiscal 2005. For its quarter ending Dec. 31, Global earned revenue of $277.5 million, generating profit of $17.5 million, both up at least eight percent from the same period last year.