DealZone

Xerox’s deal no carbon copy of Dell’s

September 28, 2009

After Dell went to its $10 billion treasure chest to buy up Perot Systems for $3.9 billion, you might have expected investors to be a little more excited about Xerox’s bid for ACS. After all, business services helps Xerox get away from nuts and bolts copiers, much the way Perot was seen helping Dell move away from building computer boxes. And ACS is seen giving Xerox more chips to play against HP, which bought Electronic Data Systems a little over a year ago.

The Xerox bid, unveiled at $6.6 billion, includes 4.935 Xerox shares and $18.60 in cash for each share of ACS. That totaled $63.11 per share based on Friday’s closing prices, but with Xerox shares having lost more than 15 percent in the opening minutes today, the value is now down to a little over $55 per share. Has the office copy machine behemoth misjudged the market? Dell’s stock lost only about 6 percent following the Perot announcement.

Perhaps the issue was more one of timing than anything else. Monday is the Yom Kippur Jewish day of atonement. Speaking with analysts, Xerox CEO Ursula Burns apologized “for our need to do this announcement on Yom Kippur” “It certainly was not our intention.” they wanted to do it before it leaked, she said. The company may have a lot more than bad timing to atone for if investors don’t get behind the deal.

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