Opinion: Xerox triumphs, Ninestar sells, and Lexmark’s best days fade
January 6, 2025
The rumoured sale of Lexmark International closed as the calendar year drew to a close, marking a transformative chapter for the imaging and printing industry. The winners in this high-stakes deal are undoubtedly Xerox and Ninestar Corporation. For Lexmark, however, the transaction cements a reality many had long suspected: its best days are behind it.
Xerox’s Bold Gambit
Xerox’s acquisition of Lexmark is the latest in a series of audacious moves that reflect a company determined to reinvent itself. Under the influence of activist investor Carl Icahn, who reshaped Xerox’s strategic direction in 2015, the venerable brand has embraced bold decisions to consolidate its market position. Icahn’s fingerprints can be seen in Xerox’s aggressive cost-cutting measures, operational streamlining, and an unrelenting focus on shareholder value.
This deal with Lexmark underscores Xerox’s ambitions to expand its footprint and solidify its hybrid strategy, which blends traditional OEM products with innovative offerings like the Xerox Everyday range. The Everyday range—a disruptive combination of remanufactured and new-built cartridges—has already rattled competitors and reshaped the imaging aftermarket. Adding Lexmark’s technology and distribution networks provides Xerox with a fresh arsenal to challenge rivals like HP, Canon, and Epson.
The move also signals a renewed confidence at Xerox following its failed $35 billion bid to acquire HP in 2020. While that audacious attempt fell short, it highlighted Xerox’s willingness to push boundaries. The Lexmark acquisition, by contrast, appears both strategically and financially prudent—a win that allows Xerox to expand without overstretching.
Ninestar’s Timely Exit
For Ninestar Corporation, the sale of Lexmark represents a timely and positive disposal. Acquired in 2016 for $3.6 billion, Lexmark was seen as a jewel in Ninestar’s crown. It offered access to enterprise printing technologies and complemented Ninestar’s aftermarket expertise, including its G&G brand and chip production via Static Control Components. However, the acquisition never fully delivered on its promise.
Facing increasing scrutiny over compliance and sustainability in global markets, Ninestar’s decision to offload Lexmark reflects strategic pragmatism. The funds generated by the sale—rumoured to be close to $1.5 billion—will allow Ninestar to focus on its core strengths while navigating the challenges posed by stricter regulatory environments in Europe and North America.
This disposal also highlights a shift in Ninestar’s priorities. The company has doubled down on its aftermarket operations, which remain a critical revenue stream amidst the changing landscape of the imaging industry. By shedding Lexmark, Ninestar is effectively cutting loose an asset whose declining influence no longer aligns with its long-term goals.
Lexmark: A Legacy in Decline?
For Lexmark, the sale marks an ignoble milestone in a once-proud history. Established in 1991 following a spin-off from IBM, Lexmark rose to prominence as a leader in laser printing technology, with a reputation for innovation and quality. Its enterprise-focused offerings made it a trusted partner for large organisations worldwide.
Yet in recent years, Lexmark has struggled to adapt to the evolving market. Competitors embraced cloud solutions, subscription models, and inkjet innovations, while Lexmark remained tethered to its legacy. Under Ninestar’s ownership, Lexmark’s brand diminished further, with layoffs, restructuring, and reduced investment in R&D eroding its competitive edge.
Lexmark’s challenges were further compounded by external factors, including the United States’ enforcement of the Uyghur Forced Labor Prevention Act, which banned imports linked to forced labour in China. As a subsidiary of Ninestar, Lexmark’s operations were impacted by this legislation, adding another layer of complexity to an already difficult market position. Publicly, Lexmark sought to distance itself from Ninestar’s troubles, presenting an image of independence and minimising the ban’s effects on its business. However, the association with Ninestar inevitably cast a shadow over its operations and market reputation.
While Lexmark operates as “business as usual” for now, questions remain about its future trajectory. Will the company return to the litigious strategies of the past, when Lexmark’s legal teams outnumbered its engineers in their pursuit of aftermarket competitors? Moreover, the status of the exclusive licensing agreement with Static Control Components to provide working chips hangs in the balance. Under Xerox’s ownership, the continuation of this deal is uncertain and could significantly impact the aftermarket landscape.
The sale to Xerox signals a fresh start for Lexmark, but it is one tinged with finality. Once a titan in its own right, Lexmark’s future now depends on its role within Xerox’s broader strategy. While the acquisition offers potential synergies, it also underscores Lexmark’s inability to thrive independently in a rapidly shifting industry.
Is It Good for Lexmark?
Typically, companies being taken over face significant challenges, and Lexmark is unlikely to be an exception. Acquisitions often bring sweeping changes, particularly for employees, who face uncertainty, layoffs, and cultural upheaval. While Xerox’s strategic focus might offer some stability for Lexmark’s operations, history suggests that the workforce may bear the brunt of restructuring efforts.
In the broader context, the sale highlights Lexmark’s diminishing independence and relevance. Once a market leader, it now joins a roster of acquired companies where brand identity and legacy often give way to integration and cost optimisation. For employees, this transition may mean navigating a future that prioritises efficiency over innovation.
Winners and Losers
The imaging and printing industry is no stranger to upheaval, and this transaction reflects its ongoing consolidation. For Xerox, the deal is a strategic coup, enabling it to bolster its market position and capitalise on Lexmark’s remaining strengths. Ninestar’s exit is equally savvy, freeing the company to refocus on its aftermarket dominance without the drag of a struggling asset.
Lexmark, however, emerges as the clear loser. While its technologies and customer base remain valuable, the sale cements its status as a brand in decline—a far cry from its IBM heritage and the promise of its early years.
Conclusion
As 2024 turns to 2025, the Xerox-Lexmark deal will be remembered as a pivotal moment in the industry’s evolution. Xerox’s reinvention, guided by Carl Icahn’s legacy, is a testament to bold decision-making and strategic clarity. Ninestar’s timely disposal reflects a company adept at recognising when to pivot. For Lexmark, however, the story is one of missed opportunities and a legacy consigned to history. In the reshaped imaging landscape, only the bold survive, and this deal has underscored that maxim with stark clarity.
Meanwhile, attention turns to HP, the other prominent US printer OEM. As one of Xerox’s fiercest competitors and a major player in the imaging industry, HP’s future strategy will undoubtedly shape the market. Will it respond to this consolidation with acquisitions of its own or double down on its existing strengths? We’ll share our thoughts on HP’s trajectory next week, exploring what lies ahead for this industry giant.
Categories : World Focus
