Xerox deal for Lexmark ‘solid in theory,’ but raises questions, says JPMorgan

After Xerox (XRX) announced a definitive agreement to acquire Lexmark for $1.5B, JPMorgan said the deal will enhance Xerox financials on a theoretical basis even before synergies and represents “a solid combination in theory” as Lexmark “appears on the surface to be the acquisition of a better managed company in Core Print and with more attractive exposure to growth markets and better channel presence.” However, the acquisition will “raise many questions when put in context of the recent challenges and strategic actions taken by Xerox recently over the last couple of years,” argues the analyst, who remains cautious around expectations of delivering to targets and keeps an Underweight rating on Xerox shares.