Xerox May Sell Leasing Unit

Reuters reported on July 13th that Xerox Corp is considering selling its leasing unit that lends money to customers to rent printers and equipment, in order to make itself more attractive to potential buyers, according to people familiar with the matter.

After Xerox’s termination of a complicated sale to Fujifilm for $6.1 billion, activist investors Carl Icahn and Darwin Deason, who together are Xerox’s largest investors, holding together about 15 percent of Xerox shares, said one option for Xerox may be public auction. New Xerox CEO John Visentin has forcefully said that a new deal with Fujifilm would not happen.

Selling the leasing unit would relieve Xerox of roughly $3.6 billion in debt, according to one of Reuters’ sources, making it more attractive to potential buyers. According to Reuters, Xerox has a market capitalization of $6.4 billion and total debt as of the end of March of $5.5 billion.

Buyout firm Apollo Global Management is said to have approached Xerox about a possible acquisition. According to Reuters, reducing  Xerox’s debt by selling the leasing finance unit would allow private equity firms to place more debt on the company “to juice returns.”

According to CRN, Xerox Financial Service is used for 90 percent of transactions, while Xerox Capital Services is used for Xerox direct sales.

Josh Justice, president of Just Tech in La Plata, Maryland, told CRN: “We as most Xerox Channel Partners use Xerox Financial Services for our business to finance many of our clients multifunction printers orders and they are fantastic to work with. We also work with Great America [Financial Services] and they have been great to work with as well.  I think as a provider of office technology equipment it is good to have relationships with multiple leasing companies.”

A spokesman for Xerox said the company was not commenting on the Reuter’s story.

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