The Strategist

HP to buy Samsung's printer business


09/12/2016 - 14:23



Samsung Electronics decided to get rid of its business for production of printers, and has already found a buyer - American HP Inc. The transaction is valued at US $ 1.05 billion, and Samsung has also committed to purchase HP shares (publicly traded) in the amount of $ 100 to $ 300 million.



Jamie McCall
Jamie McCall
HP believes that, despite the shrinking global market of printing and copying devices, the deal with the Korean technology giant will help increase market share and revenues. As noted by Bloomberg, the deal will give HP access to innovative laser printing technology, and will offer a chance to strengthen their positions in the market of office copiers, now dominated by Xerox and other companies.

In the last quarter, revenue of HP’s printer division decreased by 14% year-on-year to 4.42 billion, and gross sales fell by 4% to 11.9 billion. The company recently announced restructuring, which implies, among other things, a reduction of 3,000 people.

Samsung, according to analysts, regard the deal within its overall strategy, in which the Korean company is focused on markets with maximum growth potential. "The world of paper goes into the past - said Mark Newman, an analyst at Hong Kong-based Sanford C. Bernstein, to Bloomberg. - Printers have no great prospects. Everything is shifting on the screens, and Samsung is the world’s largest supplier of displays."

The companies have a year to fully complete the transaction. During this time, it is expected to complete all legal procedures and perform calculations. Samsung will sell printers under the familiar brand on its home market in South Korea, but the devices will be made by Hewlett-Packard. The Americans will create a new company instead of Samsung Printing Business Unit division. In turn, Samsung has made a commitment to invest part of funds received during under the agreement in Hewlett-Packard.

The global market for printing equipment is estimated at $ 55 billion a year. Hewlett-Packard is going to inject new life into the established business since usual printing devices are obsolete and require replacement. To realize these ambitious plans, HP now has a factory in China, design office, as well as more than six and a half thousands of patents and licenses. The company will employ six thousand already former Samsung employees, a quarter of whom are degreed professionals. Hewlett-Packard will also possess offices in fifty countries.

It’s not finances that got the Americans interested in Samsung printer division. The South Korean vendor’s revenue in this area has barely reached 1.8 billion dollars a year. Hewlett-Packard is interested in acquiring industrial technology of manufacturing of A3 multifunctionals. HP expect to combine achievements thus receiving a device which would have no competitors in the market.

Samsung Electronics is an international electronics manufacturer, headquartered in Seoul (South Korea). The staff numbered about 319 thousand people in 84 countries as of April 2016. Volume of annual sales of Samsung Electronics is 196 billion dollars.

American company HP Inc., operating in the field of Information Technology, was founded in 1939 in Palo Alto, California. Net income for the first nine months of fiscal year 2015-2016 (ended 31 July) amounted to 2.004 billion dollars. 

source: bloomberg.com




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