According to reports, United States computer giant HP has agreed a transaction to take over Samsung’s $1 billion printer business. The deal is being marked as the largest print acquisition in HP’s history, and is expected to accelerate growth opportunities in the copier segment.
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HP confirmed in 2014 that it was to split its business into two separate companies: Hewlett-Packard Enterprise (HPE) – selling servers and enterprise services – and HP Inc – selling PCs and printers.
The sales, manufacturing, and development departments of the printer business unit will belong to the spin-off company, but the human resources department will remain at the Korean tech giant.
HP’s printer business has struggled in recent years, with revenues falling 14.3 percent year-on-year in its recent third quarter results.
According to HP’s Chief Executive Officer, Dion Weisler, the company intends to flow revenue with a greater objective through expansion of its A3 printing markets, which is a business that HP (NYSE: HPQ) estimates brings in $55 billion in revenue annually. The deal also strengthens its leading laser printing portfolio that has been established with Canon. “Samsung’s laser technology could reduce its reliance on Canon”.
“This is a major strategic move for HP”, Enrique Lores, president of Imaging, Printing & Solutions at HP, said on a conference call. “That is very, very important”.
Samsung officials have said given the Confucian tradition of filial piety, it has been hard for the younger Lee to take on a bigger leadership role while his father is still alive. HP has a small presence in the office copier market, which is dominated by the likes of Xerox Corp. “In this scenario, HP could see potential synergies increase beyond straightforward consolidation”. “We want to drive this consolidation and make it happen”.
Samsung’s printer business also brings an intellectual property portfolio of more than 6,500 printing patents. The deal includes about 6,500 of Samsung’s printing-related patents. Last year, consumer electronics contributed just 4.7% of the company’s operating profit, while the higher-profile smartphone and chip divisions generated 38.4% and 48.4%, respectively.
Samsung’s board of directors approved the sale of its Printing Business Unit during a meeting in Seoul today, with a follow-up meeting with shareholders scheduled for October.
Daryanani said HP could reduce its cost-of-goods profile as a result of the asset purchase.
The American technology company claims that copiers are outdated, complicated machines with dozens of replaceable parts requiring inefficient service and maintenance agreements.
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Xerox, the No.1 A3 hardware maker, contends its line of A3 hardware remains broader and more productive than HP’s.
