Xerox has agreed to buy business process outsourcer Affiliated Computer Services (ACS) for US$6.4 billion, a move it hopes will allow it to expand beyond the field of document management.
The deal will triple Xerox's revenue from services, from $3.5 billion a year to $10 billion a year, the company says.
Dallas-based ACS was one of a shrinking band of outsourcers not yet tied to a hardware vendor.
Coming hot on the heels of Dell's announcement last week that it will buy Perot Systems for $3.9 billion, the Xerox-ACS deal could increase the pressure on other independents, including CSC, Unisys and Indian companies such as Wipro and Infosys Technologies, to find a suitor. The name of perhaps the best-known independent, EDS, disappeared last week when its brand was subsumed into that of Hewlett-Packard, which acquired it last year.
For the year to June 30, ACS reported revenue of $6.52 billion, up 6 percent on the previous year. Around 40 percent of that came from government customers, making ACS one of the largest providers of managed services to US government bodies.
Xerox's 54,000 staff work on document management technologies and services, as well as on the company's historic photocopier business. The company reported a 2.2 percent year-on-year rise in revenue for its 2008 fiscal year, to $17.61 billion, of which 26.6 percent came from equipment sales.
As a subsidiary of Xerox, ACS will operate as an independent business run by its current CEO, Lynn Blodgett.
Xerox will pay about 30 percent of the purchase price in cash, and the rest in stock. It expects the deal to close in the first quarter of next year, subject to approval from regulatory authorities and the companies' stockholders.