"Ninestar said in an exchange filing on Wednesday that it has estimated the transaction price to range from $75 million to $150 million, based on Lexmark's latest operational status."
WTF?
So this thing is saddled with debt, and XRX is borrowing money to buy it? I thought it was worth 1.5 Billion? It's actually worth 1/10th to 1/20th of what they thought it was 3 months ago - and they're going to buy it anyway?
Typical Xerox fruit salad spin at its best. In 3 months post I wonder what the Lexmark valuation will be...
No you're wrong
You are confusing enterprise value with equity.
The value of the deal is still 1.5B.
So yes, Xerox has to pay $150M to buy Lexmark. But Lexmark has debt and liabilities, a lot of it. So we're basically saying to Lexmark all the debt and liability you have, we will take over, and on top of that we will give you $150M in cash. In return, we get all your assets. Building, Manufacturing, R&D, IPO etc. valued at 1.5B
The Reuters article you are referring to is comparing Apples to Oranges.
I looked at the financial statements of Lexmark yesterday. Honestly, I think that $75m to $150m is still too high a price to pay.
This significant reduction in price raises a couple of questions - 1) How was Xerox able to issue $800M in debt to buy something worth maybe $75M? What was Jefferies looking at to underwrite $800M of debt for the purchase of a largely worthless asset? 2) A 90% reduction in price likely indicates there has been a material adverse change (MAC) in Lexmark. If the purchase agreement was properly written, this MAC should give Xerox the opportunity to walk away from the deal. I hope Xerox seizes this opportunity. Don't waste shareholders' money on another junk asset.
Insanity at its Best. Leave it to Xerox.
Like getting married and you constantly fight with your wife…and you get a dog, a new house, and a baby.
The only one that makes any money are the lawyers. Everyone else is gonna get the short end of the stick, friends, family, and anyone who cares.
Another great idea from xerox. Hope you like beans and franks. Because thats all you can afford now.
Make smart choices. Stay away from xerox like the plague…
Oh yeah. You read that right.
Lexmark — originally priced at $1.5 billion — is now estimated by Ninestar to be worth between $75 million and $150 million.
That’s not a typo. That’s not a discount.
The original $1.5B was Enterprise Value — which included all the debt, liabilities, and financial rot Xerox would inherit.
What Ninestar disclosed this week is the Equity Value: what’s left over for them after Xerox assumes Lexmark’s debt, cash burn, and negative working capital.
So yes — Xerox is still going to buy it.
And yes — Xerox is borrowing to do it.
Because this is about buying time.
What Xerox is actually acquiring is:
So if you’re shocked — good. You should be.
The Enterprise Value is still 1.5B
150M in Equity