Xerox Reportedly In Merger Talks With R.R. Donnelley

Xerox is reportedly in talks to acquire copier and printer and related services business R.R. Donnelley & Sons Co.

According to a Bloomberg report, Xerox would acquire Donnelley before Xerox completes its split into two companies, which is expected later this year. The report, citing anonymous sources, said Xerox would merge some of Donnelley into its copier, printer and related-services business and the rest with its smaller business process outsourcing services division. The Xerox split will separate those two businesses into separate entities.

The report also said that the deal would stop Donnelley’s current plans to split into three publicly traded companies, which it announced last-year.

[Related: Partners Applaud Xerox Decision To Keep Its Name For Post-Split Products Business]

One executive at a Xerox solution provider that does a lot of work with Xerox said he would view an acquisition of Donnelley as a step backward for Xerox.

’This move doesn’t feel like a step in the right direction,’ said the owner, who wished to remain anonymous. He added that he feels Donnelley ’seems like an ’old-school’ business’ and doesn't fit into Xerox’s focus on progressive technologies.

’This certainly piques my interest, because we are a progressive company and we are not going to change our strategy,’ he said.

Representatives of Xerox and R.R. Donnelley, based in Chicago, declined to comment.

According to the Bloomberg report, Xerox – which reported revenue of about $11 billion from its document technology business in 2015 -- has a market value of about $9.6 billion, while R.R. Donnelley -- which reported $11.3 billion in revenue during its 2015 fiscal year - has a market value of about $3.9 billion.

Last month, Xerox named Jeff Jacobson as CEO of its document technology business, which will retain the Xerox name. Ashok Vemuri, who began working for Xerox July 1, is slated to take on the CEO role for the smaller of the post-split companies, which will be called Conduent and focus on business process outsourcing services.

Xerox announced in January that it would split into two companies, weeks after activist investor Carl Icahn bought more than 7 percent of company's stock and announced his intention to discuss possible operational improvements and strategic alternatives for the company.

The new Xerox will employ about 39,000, while Conduent will have about 96,000 employees, according to Xerox. Both will be Fortune 500 companies.

The two companies saw positive movement in after-hours stock trading following the report of Xerox-Donnelley merger talks. Xerox stock, which fell 0.42 percent during trading Monday to close at $9.50 a share, jumped nearly 3 percent after the closing bell on Wall Street. Donnelley stock also jumped after hours, skyrocketing 6.23 percent after rising 2.33 percent during the day to close at $18.45 a share.