Xerox Takes Gamble in Bid for ACS

Xerox Corp. (XRX) and its new chief executive, Ursula Burns, unveiled the biggest acquisition in the company’s 103-year history, joining a wave of hardware makers expanding into services with a $5.6 billion deal for Affiliated Computer Services Inc. (ACS).

Aimed at snapping Xerox out of its funk, the acquisition and integration of ACS–which has 74,000 workers compared with Xerox’s 54,000–is a big gamble by a new CEO. But Ms. Burns, a Xerox veteran who took over in July, is seeking new markets as Xerox’s traditional copier and printer business faces pressure from rivals such as Hewlett-Packard Co. (HPQ).

Investors frowned on the stock-and-cash deal, sending Xerox’s shares down 14 percent in New York Stock Exchange trading. The company is taking on more than $2 billion in debt, paying $1.8 billion in cash and tapping the capital markets to finance $3 billion.

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