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NORWALK, Conn. (


) --


(XRX) - Get Xerox Holdings Corporation Report

has agreed to buy

Affiliated Computer Services


for $6.4 billion in cash and stock.

The deal values ACS shares at $63.11, a premium of 33.6% over its closing price Friday of $47.25.

Xerox CEO Ursula Burns, who described the deal as a "game-changer for Xerox" in a press release said Xerox will become a $22 billion company, with services revenue jumping to around $10 billion next year from $3.5 billion in 2008.

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Under the deal, ACS shareholders will get $18.60 a share in cash, along with 4.935 Xerox shares for every ACS share they own. Xerox also will issue some $300 million in convertible preferred stock to ACS's Class B shareholders, and will take on ACS's $2 billion in debt.

"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," ACS CEO Lynn Blodgett said in a statement. Blodgett will continue heading the operation and will report to Burns.

"Xerox offers that and more to bring our business to the next level while strengthening theirs," she added.

The deal, which is expected to close in the first quarter of 2010, is also forecast to realize between $300 to $400 million in synergies for Xerox during the first three years from the close.

ACS is a Dallas-based operation with particular expertise in outsourcing processes and services for a variety of industries including telecommunications, retail, financial services and health care, among others.

-- Reported by Joseph Woelfel and Sung Moss in New York


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