Xerox Holdings Corporation (NASDAQ:XRX) has finalized the acquisition of ITsavvy Acquisition Company, Inc., the company disclosed in a recent SEC filing. The transaction, which was completed on Wednesday, involved a cash payment of $180 million and the issuance of two secured promissory notes totaling $220 million.
The acquisition agreement between Xerox and ITsavvy Holdings, LLC, initially reported in a prior 8-K filing dated October 17, 2024, detailed that Xerox would purchase all outstanding equity securities of ITsavvy Acquisition Company, Inc. This strategic move was concluded on November 20, 2024, with the cash component paid to the seller and the promissory notes due in 2025 and 2026, respectively.
The 2025 Note and the 2026 Note, each valued at $110 million, are secured financial obligations that contribute to the overall purchase price. The specific terms of these notes and the purchase agreement were outlined in the initial announcement and have been incorporated by reference into the current report.
In other recent news, Xerox Corporation (NASDAQ:XRX) has been the focus of several noteworthy developments. Loop Capital has adjusted its outlook on Xerox, reducing its price target from $11.00 to $8.00, while maintaining a Hold rating on the stock. This adjustment comes in the wake of Xerox's recent earnings release, which reported a 7.5% decline in third-quarter revenue to $1.5 billion and a decrease in adjusted earnings per share (EPS) to $0.25.
Furthermore, Xerox has declared a quarterly dividend for its common and preferred stock, with the common stock dividend set at $0.25 per share. Despite recent operational challenges, Xerox remains optimistic about its digital and IT services sectors, which have shown promising signs of growth. In line with this, the company is set to acquire ITsavvy, a move expected to enhance its IT service offerings.
In addition to these developments, Xerox managed to reduce its operating expenses by over $50 million year-over-year, and the adjusted operating margin improved by 110 basis points to 5.2%. However, the company's full-year free cash flow guidance was adjusted to a range of $450 million to $500 million, down from a minimum of $550 million. These developments highlight Xerox's ongoing efforts to adapt to market demands and provide value to its shareholders.
InvestingPro Insights
Xerox's recent acquisition of ITsavvy Acquisition Company for $400 million comes at a challenging time for the company, as reflected in its current financial metrics. According to InvestingPro data, Xerox's market capitalization stands at $1.04 billion, with the stock trading near its 52-week low. The company's revenue for the last twelve months as of Q3 2024 was $6.37 billion, showing a decline of 9.76% compared to the previous period.
Despite these challenges, InvestingPro Tips highlight that Xerox maintains a significant dividend yield of 11.92%, having sustained dividend payments for 18 consecutive years. This could be attractive for income-focused investors. However, it's worth noting that the company was not profitable over the last twelve months, with a negative P/E ratio of -4.62.
Analysts are anticipating a sales decline in the current year, which aligns with the recent revenue trends. On a more positive note, net income is expected to grow this year, and analysts predict the company will return to profitability.
For investors considering Xerox, InvestingPro offers 12 additional tips that provide a more comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable in assessing the potential impact of the ITsavvy acquisition on Xerox's future performance.
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