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Xerox to buy parent of Buck Consultants for $6.4B

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NORWALK, Conn.—Xerox Corp. said Monday that it plans to acquire Affiliated Computer Services Inc., the parent company of Buck Consultants L.L.C., in a cash-and-stock transaction valued at $6.4 billion.

The deal, which is expected to close in January, would triple Xerox's revenue from services to approximately $10 billion from $3.5 billion in 2008, the Norwalk, Conn.-based document management technology and services firm said in a statement.

No plans have been made to spin off Buck Consultants after the acquisition, a spokeswoman for Dallas-based ACS said.

“It is a key part of our human capital management solutions,” she said. “We will continue to operate business as usual” until the deal closes.

ACS provides business process outsourcing services to 1,700 federal, state, county and local governments, as well as to a host of private companies. Xerox provides office and information technology equipment to employers.

In the statement, Xerox Chief Executive Officer Ursula Burns described merging the two companies' operations as “complementary” because Xerox provides the technology while ACS provides services to businesses.

“By combining Xerox's strengths in document technology with ACS' expertise in managing and automating work processes, we're creating a new class of solution provider,” Ms. Burns said. “A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.”

New York-based Buck Consultants, which began as an actuarial consulting firm 1916, has operated as an independent subsidiary of ACS since 2005. It provides human resources consulting services addressing employee health and wellness, HR technology, and administration and retirement plans. Its clients include 45% of Fortune 100 companies.

Under terms of the agreement, ACS shareholders would receive $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own, for a total value of $63.11 per share. In addition, Xerox is to assume $2 billion in ACS debt and issue $300 million of convertible preferred stock to ACS' Class B shareholders.

The transaction, which has been approved by the Xerox and ACS boards of directors and an ACS special committee, is expected to close in the first quarter of 2010. ACS will operate as an independent organization and initially will be branded ACS, a Xerox Co. It will be led by Lynn Blodgett, who will report to Ms. Burns.

The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of ACS and Xerox stockholders. Obtaining domestic and foreign regulatory approvals will be a necessary part of closing the deal.

The Xerox-ACS deal comes on the heels of another proposed merger in the IT services business. Last week, Round Rock, Texas-based computer manufacturer Dell Inc. said it would acquire Perot Systems Corp. of Plano, Texas, for $3.9 billion.