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Why Xerox Stock Rose 17% in January

By Demitri Kalogeropoulos - Feb 6, 2018 at 9:08AM

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The printing giant agreed to be acquired by its Japan-based partner.

What happened 

Xerox (XRX) shares climbed 17% last month, according to data provided by S&P Global Market Intelligence. That compares favorably to the 6% gain in the broader market.

XRX Chart

XRX data by YCharts.

The uptick put shareholders nearly back on pace with the S&P 500 over the last year. But the struggling printing technology specialist has still lost ground over longer time frames, including the past three-, five-, and 10-year periods.

So what

January's jump came following news that Xerox had agreed to be acquired by Fujifilm. Investors had suspected such a deal might materialize, and on Jan. 31 the company made it official with a merger announcement.

Now what

If they simply hold their shares through the transaction, which is projected to conclude in the second half of 2018, Xerox investors stand to receive a mix of cash and stock. Specifically, at closing the deal will deliver $2.5 billion, or $9.80 per share, in cash to shareholders in the form of a one-time special dividend, along with stock that will equate to about 50% ownership of the combined company.

Blue charts underneath a tablet with the same blue graphics next to a silver pen.

Image source: Getty Images.

Xerox is hoping that the larger scale and reduced expenses from the merger will help it achieve the consistent sales and profit growth it couldn't reach on its own. The cost savings will be significant -- but so will interest payments from the $2.5 billion in debt that will be used to finance this move.

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