Xerox takes over Affiliated Computer Services

Xerox, the world’s largest maker of high-speed color printers is going to take over Affiliated Computer Services(ACS), a business process outsourcing company. They agreed a sum of $6.4 billion cash and share offer. That way Xerox has the opportunity to expand on their market, that’s office document management and digital data management. Xerox hopes to combine its expertise in automated document scanning and also routing with ACS technology.

Ursula Burns, chief executive of Xerox who will lead the new group said this deal was a great opportunity as a ‘game changer’(revolution) for her company. "Xerox becomes a 22 billion dollar global company. The revenue we generate from services will triple from 3.5 billion dollar in 2008 to an estimated 10 billion dollar next year.

The ACS shareholders will receive 4935 Xerox shares for each ACS share they have and also 18.60 dollar cash per share.

The companies expect to achieve a saving of 300 to 400 million dollar in the first three years. A negative point is there will be job losses because functions overlap. But yet both companies expect that they go to a long-term expansion. The transaction, which was approved by both boards of directors is also supported by the shareholder approval.

Other news is that Darwin Deason, the founder of ACS 21 years ago and now the single largest individual shareholder in the merger, will be in the company as a long-term investor.

Lynn (male)Blodgett, president and CEO of ACS said he will continue to run his company as an independent organisation, but he is very relieved with the merger because he said that ACS need a partner to expand globally and take their business to another level. Xerox offers that and we both have lots of advantages with this project.

October blog, individual

Teirlynck Mathias

3FV3

Source: The Times and BBC

The forced sale of Opel to Magna

This weekend, the 2 candidates of the genereral election in Germany took both credit to save Opel from bankruptcy and its 4 factories in Germany from closure. Angela Merkel and Frank-Walter Steinmeier have really nothing to be proud of because the deal they announced a few weeks ago to sell 55% of the European arm of general Motors to a group that consist of Magna, an Austro-Canadian auto parts firm, and Sberbank.

The other factories(Belgium, Britain and Spain) asked Nelie Kroes, Europe’s competition commissioner, to look if Germany infringed EU rules.

The deal the Germans forced to do was really the worst they could do if you see the other options in terms of industrial logic. This facts make it very likely that the loans lavished on Magna and Sberbank will never be repaid. General motors’ declared that they are not happy with the forced sell to Magna and Sberbank. The Russian retail bank wants to make Opel’s technology available to its client GAZ which is Russia’s second-biggest carmaker.

Since the German government knew that GM was heading for bankruptcy they only though in the sense of short-term expediency, what was good for themselves instead of handling with the long-term health of the European car industry. In Germany this industry is very important so those negotiations are vital.

Opel is in really big problems although they make good cars. The problems is that there are twice as many factories as its needs. The loss is also caused by losing market share to Volkswagen and ford and if they should decide to do a big restructuring, the problems would not be solved. Even the Chairman Klauz Franz has no answer to the problems.

Just say nein

The government said that of the three proposals on the table(Fiat, RHJ Int, and a Belgian private equity) only Magna had the opportunity because they promised to keep every Opel factory open regardless of its efficiency. The German government’s two nominees to the Opel trust board, who they set up to run the company until it is sold, could bring themselves to support the plan. One of them, Manfred Wennemer, declared: “The state carries the entire risk. We don’t have a solution that will eventually turn Opel into a competitive company.” Were it not for Mr Stronach’s(chairman Magna) lifetime ambition to own a carmaker, even Magna might be having second thoughts.

Two of its biggest customers, BMW and VW told that they are worried about the possible incoming conflicts of interest and could start their business elsewhere. So the conclusion is, this deal stinks! We will see the possibilities after the elections.

Team version

Jens Vanderstappen,Michiel Van Hulle, Jérôme Santy,Mathias Teirlynck

Sep 24th 2009
From The Economist print edition