1.
|
Why
did Xerox decide to purchase ACS?
|
·
|
We believe the acquisition
will:
|
–
|
Provide
distinct competitive advantages
|
–
|
Enhance
our financial profile
|
–
|
Provide
significant growth opportunities (through new offerings, global expansion
and cross-selling)
|
·
|
Additionally:
|
–
|
The
strategic context in which we operate has evolved significantly over the
past several years
|
–
|
Xerox
studied all BPO opportunities and believed ACS was the best fit for
Xerox
|
–
|
There
is a need, confirmed by what customers are saying, for a new type of
solutions provider to offer a broader range of services to
customers
|
–
|
We
believe the general trend toward outsourcing, particularly in the current
economic environment, will accelerate as companies strive to cut costs and
streamline operations
|
–
|
Xerox
has built a successful business as the industry’s leader for document
technology and services. Xerox has been modestly participating in the
related business process outsourcing market, which is often dependent on
document management, especially automating paper-based work processes.
Through their strategic initiatives, it became clear that this is a growth
market most aligned with our base business and most critical to our
long-term growth opportunities.
|
–
|
ACS
has successfully built its $6.5 billion business by developing BPO
offerings that automate document-intensive work processes and seamlessly
connect paper and digital data. As the lines blur between core document
management and document-intensive BPO, our companies identified an
opportunity to combine our strengths and create the leading global
enterprise for comprehensive document and business process
management.
|
–
|
The
combination of our two companies will create a global leader in providing
next-generation solutions:
|
º
|
Combining
best-in-class BPO and document technology
platforms
|
º
|
Extending
Xerox Services offering and providing instant scale in
BPO
|
–
|
This
combination, and the resulting services offering it will enable, will
provide dramatically enhanced value for our customers, employees,
partners, and shareholders
|
2.
|
What
are the terms of the acquisition?
|
·
|
Xerox
and ACS have signed a definitive agreement for Xerox to acquire ACS in a
cash and stock transaction valued at $63.11 per share, or $6.4 billion, as
of the closing price of Xerox stock on Sept. 25. ACS shareholders will
receive a total of $18.60 per share in cash plus 4.935 Xerox shares for
each ACS share they own. In addition, Xerox will assume ACS’ debt of $2
billion and issue $300 million of convertible preferred stock to ACS’
Class B shareholder.
|
3.
|
How
will ACS operate as part of Xerox?
|
·
|
ACS
will be an independently-run Xerox organization and will serve as Xerox’s
core BPO business. It will operate as ACS, a Xerox Company, led
by current ACS CEO Lynn Blodgett, who will report to Xerox CEO Ursula
Burns.
|
4.
|
What
synergies will result from the Xerox acquisition of
ACS?
|
·
|
Revenue
growth synergies: We will achieve significant incremental revenue growth
by leveraging Xerox’s strong global brand and established client
relationships to scale ACS’ business in Europe, Asia and South America. In
addition, Xerox will integrate its intellectual property with ACS’
services to create new solutions for end-to-end support of customers’ work
processes.
|
·
|
Cost
reduction synergies: Xerox expects to achieve annualized cost synergies
that will increase to the range of $300 million to $400 million in the
first three years following the close of the transaction. The synergies
are primarily based on expense reductions related to public company costs,
procurement and using ACS’ expertise in back-office operations to handle
some of Xerox’s internal functions.
|
5.
|
Will
people on either side lose their jobs as you look to meld together
overlapping functions? How will the Dallas market be affected
by the transaction? Will there be
relocations?
|
·
|
It’s
premature to speculate on job reductions. We will capture cost
savings over time as we combine the companies, especially in areas like
eliminating duplicate public company costs and by taking advantage of our
stronger purchasing power. We will also evaluate if/how ACS’
expertise in back-office operations can help improve our efficiency in
these areas.
|
·
|
In
identifying cost reduction opportunities, however, Xerox and ACS will be
diligent to minimize the disruption of the business; We have built a
strong foundation for future success and we intend to preserve that
foundation as we look to maximize return on
investment
|
6.
|
Will
you adjust compensation so there is equity between ACS and Xerox
people?
|
·
|
Your
pay will not change as a result of the acquisition and will continue
uninterrupted with ACS
|
7.
|
Will
Xerox recognize ACS seniority?
|
·
|
Yes.
Xerox will recognize time with ACS as applicable to benefits and other
policies
|
8.
|
What
do I tell clients if they ask me
questions?
|
·
|
You
should feel free to share with them the information in the press
release. Reassure them that there is no change to the way we provide
services or support.
|
·
|
Please
refer to your manager for further information and
guidance.
|
9.
|
How
should I respond to a Xerox employee who wishes to speak to me, an ACS
colleague, or wants information about
ACS?
|
·
|
Please
instruct all inquiring Xerox employees to contact joe.m.barrett@acs-inc.com.
Or you can refer them to the ACS website for
information.
|
10.
|
What
will happen between now and when the deal
closes?
|
·
|
There
will be no changes made from now until the deal closes. Both ACS and
Xerox will continue to operate business as
usual.
|
·
|
The
majority of the work between the announcement and closing of the deal will
consist of obtaining the necessary domestic and foreign regulatory
approvals as well as approval from ACS and Xerox
shareholders.
|
·
|
The
transaction is subject to customary closing conditions, including domestic
and foreign regulatory approvals, as well as the approval of shareholders.
It is expected to close in early
2010.
|