NEW YORK (CNNfn) - Xerox Corp., in a direct challenge to Hewlett-Packard's leadership in office color printing, said Wednesday it would acquire Tektronix's Printing/Imaging Division for $950 million in cash, the largest document-related acquisition in the company's history.
The Stamford, Conn.-based Xerox (XRX) said the addition of Tektronix's color laser and solid ink printers, which logged $725 million in sales last year, will give its office printing unit a 30 percent share of the color print market.
Xerox, best known for its copying machines, cited market research from International Data Corp. indicating that the color printing market will grow at an annual rate of 23 percent through 2003.
Xerox's stock activity over the last 12 months
Allyson Frasco, an analyst at IDC, said Hewlett-Packard (HWP) had about 37 percent of the desk top color laser and solid ink market in the United States last year.
Tektronix came in second with 33 percent and Xerox had 2 percent of the market. For the first half of 1999, Hewlett-Packard had 45 percent of the market, Tektronix had 30 and Xerox held steady at 3 percent.
"Xerox has become the one HP needs to be looking at in terms of printers," Frasco said. "They've become pretty aggressive over recent years."
Jerry J. Meyer, chairman and chief executive officer of Tektronix Inc., and Rick Thoman, president and CEO of Xerox, appeared on CNNfn to discuss the deal.
"When Rick and I talked about what we both brought to the market place," Meyer said, "it didn't take a lot of conversation to figure out it was the right thing to do."
Thoman said Xerox felt it would take four or five years to get where Tektronix is today.
"The market for color is poised to explode," he said. "It could be a $5 billion market a few years from now."
Trektronix's stock activity over the last year
Xerox said it expects to combine its color printer operations in Webster, N.Y., with Tektronix's. The Tektronix facility is located in the Portland, Ore., suburb of Wilsonville and employs about 2,400. A Xerox spokesman said the company does not expect to lay off any employees.
The deal is subject to regulatory approval and is expected to close within 60 days. The Tektronix name will remain with its measurement division.
Tektronix (TEK) is the world's No.1 maker of oscilloscopes, which engineers use to view, measure, test and calibrate electric signals.
Shares of Xerox fell 3/8 to 41-5/8. Tektronix rose 1/16 to 34-15/16.