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Xerox to buy BPO firm ACS

Xerox has announced it will buy US business process outsourcing specialist ACS for $6.4 billion

Xerox to buy BPO firm ACS
Ursula M Burns, CEO of Xerox (l) with Lynn Blodgett, CEO of ACS.

Xerox has announced that it will acquire business process outsourcing specialist Affiliated Computer Services (ACS) in a $6.4 billion deal.

The acquisition is intended to be a "game changing deal" according to Xerox, which will combine its document management capabilities with ACS' expertise in automation of business processes and IT services.

ACS is the world's largest diversified BPO firm, with 74,000 employees serving a range of sectors, including telecommunications, retail, financial services, healthcare, education and transportation. ACS is also the largest provider or managed services to the US government.

Ursula M Burns, CEO of Xerox commented: "By combining Xerox's strengths in document technology with ACS' expertise in managing and automating work processes, we're creating a new class of solution provider. A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.

"Xerox becomes a $22 billion global company, of which $17 billion is recurring revenue - a significant boost to our profitable annuity stream. The revenue we generate from services will triple from $3.5 billion in 2008 to an estimated $10 billion next year," she added.

The cash and share deal, which also sees Xerox take on $2 billion debt from ACS, is expected to be completed by the first quarter of next year. Xerox expects to make annual cost savings of $300 to $400 million in the first three years, based on expense reductions related to public company costs and applying ACS' knowledge to Xerox own internal processes.

Lynn Blodgett, president and chief executive officer, ACS said: "We're proud of our significant profitable growth over the past 20 years and our ability to manage our clients' operations with a global infrastructure and workforce. We also know that for ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation. Xerox offers that and more to bring our business to the next level while strengthening theirs."

The deal is the second high profile services acquisition in a week, following Dell's announcement that it would acquire Perot Systems for $3.9 billion.

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