Printer and office software maker Xerox Corp. (XRX) was rising Friday after agreeing to sell its technology outsourcing operations to Atos SE for $1.05 billion, almost tripling the French buyer's U.S. revenue, which will become its largest market once the deal closes, sometime in the first half of 2015.
Shares of Norwalk, Conn.-based Xerox were gaining 1.4% to $14.09, extending its 2014 advance to 16%.
Bezons, France-based Atos said Friday that it will pay $950 million for the operation, plus a further $100 million to cover tax benefits linked to the deal, and could eventually pay another $50 million depending on future performance of the unit. Based on the $950 million enterprise value, the price equates to about 8.7 times the division's operating profit.
"This intended transaction would allow us to strengthen our footprint in the US market which is an early adopter of high growth innovative technologies and to access a pool of talented and highly skilled technologists," Atos Chairman and CEO Thierry Breton said in a statement.
Breton, a former French Finance Minister, has been expanding Atos through acquisitions, buying in expertise and market share in cloud computing technology, system integration consulting and cybersecurity. Atos in May struck a €620 million ($761 million) deal for French rival Bull SA, to become Europe's biggest supplier of services for cloud computing, which enables the storage of information on central servers to be located remotely.
For Xerox, of Norwalk, Conn., the sale serves to offload one of its slower-growing units as CEO Ursula Burns refocuses the business on higher-margin, larger operations including business process outsourcing and document-management outsourcing. Xerox said it expected to book about $850 million from the deal. That cash will go towards an about $900 million war chest set aside for acquisitions, and to help fund $1 billion of share buybacks scheduled for 2015, the company said.