The purchase, disclosed Tuesday, will boost Lexmark's enterprise software sales to $700 million. It will also allow the Lexington, Ky.-based printer manufacturer and software developer to deploy overseas cash without incurring a hefty tax bill, a challenge that faces many tech companies. The target is based in Irvine, Calif., but domiciled in Bermuda. The stock trades in London and New York.
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"It makes good use of non-U.S. cash and will help to achieve our 2016 revenue and operating income margin goals for Lexmark's Perceptive Software," Chairman and CEO Paul Rooke said during a conference call with investors and analysts. Lexmark acquired Perceptive for $280 million in 2010.
Lexmark will pay $11 per share in cash for Kofax, which develops applications for customer service and engagement. Shares of Kofax gained $3.43, or more than 45%, to $10.93. Lexmark rose $2.31, or close to 5.7%, to $43.10.
Kofax provides software to the financial services, insurance and health-care industries, as well as to government offices. It generated nearly $300 million in 2014 sales from a base of more than 20,000 global customers.
Rooke said that in addition to scale and higher margins, Kofax would bring new customers and services.
"It is a little larger, certainly than our past acquisitions," the Lexmark CEO said. "But it is on strategy to what we've been pursuing in terms of transforming our company to these higher value solutions and increasing our software depth."
CFO David Reeder added that balance sheet and tax management concerns also came into play. "If we had repatriated that money we would've paid tax rates greater than 30%," Reeder said. "And we're also able to have short-term borrowings a little bit north of 1% from a borrowing rate."
The deal requires approval from regulators and more than 75% of Kofax shareholders, and Lexmark expects to close the transaction in the second quarter.
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