Today Xerox announced a $6.4 billion deal to buy BPO (short for busines process outsourcing, basically IT service) company Affiliate Computer Services (NYSE:ACS), refer to this MarketWatch article for more details.
Both companies are not new to me, because I know Xerox (Palo Alto Research Center, Wiki entry, PARC own web site) invented the computer mouse and graphical user interface (GUI) before Microsoft/PC makers, and Apple populized it. But Xerox did not make any money from those two products. They continue to make Xerox machines, and adding some features to those machines.
ACS was not new because my former employer was a division/subsidiary of EDS (Electronic Data Systems, acquired by HP a while ago). And I know the players in IT services, IBM global serivce being the No. 1, EDS was No. 2 at the time, followed by Accenture, Computer Science Corporation, Perot Systems,…in recent years, Indian IT service providers TCS (Tata), Infosys, Wipro, Cognizant, etc. are growing very fast, and gained market share from US based companies (I think EDS did not go to India early enough).
Back to Xerox/ACS deal, this morning shortly after market opened and I checked, there are not much meat left in Xerox ACS arbitrage: XRX $7.5 * 4.935 + $18.6 = $55.61, right now ACS is trading at $53.86.
*Xerox agreed to pay $18.6 and 4.935 share of Xerox stock for each share of ACS stock.
**Interesting comment from TraderMike (I believe he writes at seekingalpha and is a day trader).
Usually when so many people claim a “bad deal” with a company like Xerox, the shares tend to rise once again. I bought at the bottom today and am holding onto my shares until at least $8.00 a share – prolly in a day or two. We shall see!