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What’s the Rationale for the Lexmark Transaction?

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Lexmark is bought by an Asia-based consortium

As we saw in the first part of the series, a consortium consisting of Apex Technology, PAG Asia Capital, and Legend Capital Management agreed to buy printing and imaging solutions company Lexmark for $3.6 billion or $40.50 in cash. Following an exhaustive review of strategic alternatives, Lexmark’s board of directors unanimously recommended this transaction.

While there may be some synergy opportunities, the consortium said that they don’t anticipate closing any facilities or cutting many jobs. In many ways, this transaction is about getting Lexmark easier access to fast-growing Asian economies.

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Management’s comments

“Lexmark’s passion for excellence and unwavering commitments to customers, employees and communities represent a tremendous cultural fit,” said Jackson Wang, Apex Technology chairman. “We are excited to work alongside Lexmark as it continues to invest in advanced technologies and solutions to best serve its customers and business partners while simultaneously pursuing additional untapped opportunities for future growth.”

“Lexmark is a recognized global leader in printing technology and enterprise software, with a proven track record of performance, a consistent annuity-based business model and a talented workforce,” said Weijian Shan, group chairman and CEO of PAG. “We look forward to working with Lexmark’s management team and focusing on expanding the business in the Asia Pacific region.”

Merger arbitrage resources

Other important merger spreads include the deal between Cigna (CI) and Anthem (ANTM) and KLA-Tencor (KLAC) and Lam Research (LRCX). For a primer on risk arbitrage investing, read Merger Arbitrage Must-Knows: A Key Guide for Investors.

Investors who are interested in trading in the tech sector can look at the iShares Global Technology ETF (IXN).

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