Apex Technology Co Ltd, a Chinese maker of cartridge, toner and printer components, is reportedly interested in Lexmark International Inc, a US manufacturer of computer printers that is in the midst of transforming into a software company.
Apex, based in Southeast China's Guangdong province, is in talks to acquire Lexmark, Reuters reported on Thursday. Apex is working with a US investment bank and already has the backing of some Chinese banks, the report said, adding that there was no certainty of a deal.
Ivan Feinseth, an analyst with Tigress Financial Partners LLC, believes it would be a good move for Apex to buy Lexmark.
"Lexmark has a lot of value in its software business, and it's just taking time for the company to transition from a printer manufacturer into a higher-value software company," he told China Daily. "We print less and read more on tablets and phones, although printing is not going to go away entirely."
In a research note, Feinseth wrote that Lexmark is poised to reap the benefits of its transition in the coming years. "They are positioning themselves to benefit from trends in important growth markets. Specifically, (Lexmark's) healthcare software meets an unmet industry need by consolidating all of a patient's image records such as forms, CT scans, MRI images, into one accessible space."
Last October,Lexmark hired Goldman Sachs Group Inc to explore strategic alternatives,including a sale. Since 2010, the company has been acquiring software assets to lessen its dependence on the competitive printing business and shift to providing services and software in an increasingly digital environment.
A year ago Lexmark acquired Kofax Ltd for about $1 billion to bolster its enterprise software business.
"Lexmark believes that as part of another company, this is a better way for the transition to proceed," Feinseth said.
If Apex does acquire Lexmark, the transaction could face a review by the Committee on Foreign Investment in the United States (CFIUS), an interagency group that assesses the national security impact of foreign purchases of a US business.
"On the surface, I would say no," Feinseth said, when asked if a CFIUS review could deter an Apex-Lexmark combination. "But you never know."
paulwelitzkin@chinadailyusa.com
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