IT major HP to acquire Samsung's printer business for $1.05bn

In a move that will allow the US-based company to further consolidate its position in the $55-billion A3 copier industry, IT major HP recently announced that it will acquire Samsung Electronics' printer business in a deal valued at $1.05 billion.

The acquisition will bring an intellectual property portfolio of more than 6,500 printing patents and a workforce of about 6,000 employees globally, including nearly 1,300 researchers and engineers.

Samsung has a key engineering centre in South Korea, with operations in the US, India, China, Japan, Russia, Canada, Brazil and other countries. HP, created as part of the breakup of Hewlett-Packard Co. last year, sells personal computers. However, it gets a significant chunk of its profit from supplying ink and toner for the printers it sells. However, HP's printing division revenue fell 14 percent in the latest quarter, while overall sales was down about four percent, to $11.9 billion.

In India, HP is estimated to have close to 2,000 employees in the printer division, including R&D in Bengaluru. The acquisition of Samsung's printer business is expected to be accretive in the first full year following closing, with cost synergies and a strong financial model. The transaction is expected to close within 12 months pending regulatory review and other customary closing conditions.

After closing, Samsung has agreed to make a $100-300-million equity investment in HP through open market purchases, HP said in a statement. This is the largest print acquisition in HP's history and accelerates its growth opportunities in the copier segment, it added.

It also creates new avenues for growth and greater profitability for partners as they expand managed print services as sales models shift from transactional to contractual, it said.

HP said the integration costs are estimated to be in the range of $150-200 million over a three-year period. HP president and CEO Dion Weisler said,

When we became a separate company just 10 months ago, it enabled us to become nimble and focus on accelerating growth and reinventing industries. The acquisition of Samsung's printer business allows HP to deliver print innovation and create entirely new business opportunities with far better efficiency, security, and economics for customers.

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The deal will also strengthen HP's ability to service customers in global laser printing, a category where it has enjoyed a strong, mutually beneficial partnership with Canon, HP said. Canon is HP's supplier of printing engines in its existing product line.