The acquisition is expected to be accretive in the first full year following closing, with cost synergies and a strong financial model.
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The printer deal is expected to close in about 12 months and is subject to approvals, the companies said. As part of the agreement, Samsung has committed to buy $100 million to $300 million worth of HP shares on the open market after the acquisition closes, the companies said.
HP’s global general manager of office printing, Tuan Tran, said HP wants to get into the copier market. HP’s biggest competitor in this particular market segment is Canon, which holds a 22 percent market share. Despite posting revenue of two trillion won (approximately $1.8 billion) past year, Samsung’s printer business has continued to shrink over time, with IDC recording an 8.9% decrease in shipments since the second quarter of 2015. Now, it just so happens that Samsung (KRX: 005930) possesses a business that sells A3 machines, which will go to the manufacturer after business successfully concludes.
The key to this, HP says, is Samsung’s portfolio of multi-function laser printers, capable of handling A3 paper. By developing printing engines, HP (NYSE: HPQ) will also be able to extend its partnership to other companies looking to incorporate printing engines inside their own machines.
Samsung’s printer business includes more than 6,500 printing patents.
“HP and Canon have long discussed print innovation to create customer value in business printing and in the growing MPS market”, said Fujio Mitarai, chairman and CEO of Canon Inc.
Samsung Electronics Lee Jae-yong, the only son of its ailing chairman, has been nominated to join its board of directors. But, as reported by the Wall Street Journal, Korea’s flagship company is now streamlining in a bid to focus resources on areas which demonstrate the best performance and potential for future growth. Samsung (KRX: 005930) now ranks in 5th place in the world-wide market for printers and copies with a share of 4 percent.
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As reported by Fortune, an International Data Corporation report in May showed that worldwide printer shipments in the first quarter of 2016 declined by 10.6 percent from the same quarter a year ago. “We couple that with our expertise in security and management assets and an unmatched partner network, unmatched distribution strength, all of you here in the room, and the future is what we decide to make it”, he said.
