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Lexmark to be Acquired by Apex Technology & PAG Asia Capital

Wednesday, April 20, 2016  
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Lexmark International Inc. has announced that it has entered into a definitive merger agreement with a consortium of investors led by Apex Technology Co. Ltd. (Apex) and PAG Asia Capital (PAG), under which Lexmark will be acquired for $40.50 per share in an all-cash transaction with an enterprise value of approximately $3.6 billion, net of cash. Legend Capital Management Co. Ltd. (Legend Capital) is also a member of the consortium.

The transaction has been unanimously approved by Lexmark's board of directors and represents a 30-percent premium to Lexmark's undisturbed closing stock price on Oct. 21, 2015, the date prior to the news of Lexmark's exploration of strategic alternatives becoming public.

The transaction is the result of a thorough review of strategic alternatives undertaken by Lexmark's board of directors, with the assistance of outside advisors, to maximize value for shareholders and unlock the company's intrinsic value.

The consortium intends to maintain Lexmark's corporate headquarters in Lexington, Kentucky. Paul Rooke, chairman and CEO of Lexmark, is expected to continue to lead Lexmark after the transaction closes.

Lexmark's two business groups, Imaging Solutions and Services and Enterprise Software, as well as the company's regional and country operations, are expected to continue unaffected and benefit strategically and financially from the transaction.

The merger will be financed through equity contributions by the consortium and debt financing. The merger is not subject to a financing condition.

Upon the close of the transaction, Lexmark's common stock will cease to be publicly traded on the New York Stock Exchange.

The merger, which is expected to close in the second half of 2016, is subject to approval by Lexmark shareholders, regulatory approvals in the United States, including the Committee on Foreign Investment, China and certain other foreign jurisdictions, and other customary closing conditions.

Lexmark's board of directors also declared its regular quarterly cash dividend of $0.36 per share of Lexmark Class A Common Stock. The dividend is payable on June 17, 2016, to shareholders of record as of the close of business on June 3, 2016.

Lexmark will not host a conference call with securities analysts and investors in conjunction with its upcoming first quarter 2016 earnings release and does not expect to do so for future quarters while the transaction is pending.

Goldman, Sachs & Co. is acting as the exclusive financial advisor to Lexmark, and Wachtell, Lipton, Rosen & Katz is acting as the company's legal counsel.

Moelis & Company is acting as financial advisor to the C=consortium, along with Skadden, Arps, Slate, Meagher & Flom and King & Wood Mallesons as legal counsel.

"This is an exciting transaction that Lexmark's board of directors believes is in the best interests of our shareholders following an exhaustive strategic alternatives review process to maximize value," Rooke said. "The transaction will benefit our customers and provide new opportunities for our employees. As part of the consortium, Lexmark will be able to reach the next level of growth and innovation, to the benefit of our customers, business partners and suppliers, faster than we could achieve on our own. With the consortium's resources, we will be able to continue to invest in and grow the business to more fully penetrate the Asia Pacific market for hardware, software and managed print services."

"This transaction represents the culmination of an extensive review process by the board of directors and the next step in Lexmark's growth and transformation," said Jean-Paul Montupet, lead director, Lexmark Board of Directors. "We anticipate that the transaction will cause no disruption to our operations or our ongoing cost-savings initiatives and will only strengthen the business."

"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, PAG. "We look forward to working with Lexmark's management team and focusing on expanding the business in the Asia Pacific region."

"Lexmark's passion for excellence and unwavering commitments to customers, employees and communities represent a tremendous cultural fit," said Jackson Wang, chairman, Apex Technology. "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."

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