Data Center Finance: Xerox Sells IT Outsourcing Unit

Xerox announced in late December that it made a deal to sell its IT outsourcing business to French technology company Atos for more than $1 billion.

“It’s an important strategic move for us,” said Xerox Services president Robert Zapfel. “For Xerox, this is a chance to really focus on really growing the businesses where we are strongest. We had a lot of success with the I.T. outsourcing business, but we were subscale versus the larger players.”

The newly acquired unit, which consists of nearly 10,000 employees in 45 different countries, will be added to Atos’ growing outsourcing business. Xerox’s existing ITO clients will have access to Atos’ global IT service capabilities and a broad range of other services. The deal will allow Atos to achieve new levels of strategic collaboration and leverage the company’s ITO capabilities, tripling the company’s business in the U.S.

The transaction is expected to be completed in the second half of 2015 and will give Xerox $1.05 billion at closing, as well as the potential for an additional $50 million on the condition of certain assets at closing.

While Xerox is selling its IT outsourcing unit, it has been growing in other sectors. Earlier in 2014, the company acquired ISG Holdings for $225 million, as well as Consilience Software and Smart Data for undisclosed amounts. Stock in Xerox has increased by 14 percent this year, giving the tech giant a current value of $15 billion. Atos struggled more during the same period, with its stocks dropping 9 percent and a present valuation of $6 billion. After the acquisition was announced, the company’s stocks grew 7.8 percent in Paris, signaling improved performance in the future.

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