The deal has been designed so that HP (NYSE: HPQ) is able to provide printing solutions to firms at a high relatively higher volume. Samsung (KRX: 005930) has also agreed that it will purchase between $100-$300 million HP (NYSE: HPQ) shares through open-market purchases after the business sale has successfully been completed.
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Printing remains a key driver of HP’s overall business, but it has shown some signs of weakness as the industry is dealing with consumers doing less printing at home, in particular.
“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. For the year, HP shares have risen nearly 23 percent. However, HP’s printing division revenue fell 14 per cent in the latest quarter, while overall sales was down about 4 per cent to Dollars 11.9 billion.
While HP has always been a leading name in printing, it has thus far failed to capture one important arm of the market: photocopying, an industry valued at £41.3 billion annually. 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.
Furthermore, the transaction will also serve to fortify HP’s position in the global laser printing sector where it’s been in a partnership with Canon for the past 30 years.
Lee’s imminent participation on the board has raised speculation that Samsung would more actively deal with the unfolding Galaxy recall crisis and speed up its business reorganization, as well as its transition to a holding company structure, the analysts said. Hence, the acquisition will save HP (NYSE: HPQ) tons of partnering costs, since the firm will be able to produce this component in-house. Samsung developed the printing engines used in its own laser printers, while HP has always used external suppliers for these components.
Samsung’s printer business made $1.4 billion in revenue a year ago and includes more than 6,500 printing patents as well as almost 1,300 staff with expertise in laser printer technology.
According to the Wall Street Journal, some 6,000 Samsung employees, around 25% of which are engineers, will also move across to HP as the industry receives its biggest shake-up in decades.
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Although Samsung Electronics did not make a direct link to the ongoing Galaxy Note7 crisis, it noted that his appointment will allow him to more actively participate and take formal responsibility as a board member in important decisions such as appointments and strategic growth initiatives including M&A deals.
