- To absorb 6,000 Samsung employees
Few months into splitting Hewlett Packard (HP) company into two divisions, HP Incorporated and HP Enterprise, the company monday, closed a deal to buy the printing business of Samsung Electronics for $1.5 billion (N510 billion).
Around 6,000 Samsung employees will join HP, including about 1,500 engineers, following the acquisition.
The deal is expected to bolster the HP’s offerings in the market for high-volume devices that handle printing and copying for office work groups.
The transaction, which has regulatory approval, was concluded monday, the companies said in a statement.
Samsung also agreed to buy between $100 million and $300 million in HP shares through open-market purchases after the business sale is completed.
Confirming the deal, Managing Director, HP Nigeria, Mrs. Ify Afe, told THISDAY that the plans to acquire the printing business of Samsung has been ongoing, but that the deal was closed monday. She said HP became interested in the deal, because it wanted to boost its printing business and add more flexibility to it, in order to improve on efficiency. “The essence of the acquisition is to broaden the printing portfolio of HP, especially in the area A3 and A4 printing. We are already working Cannon Printing and the addition of Samsung Printing business, will definitely enhance our printing efficiency, designed to boost customer experience,” Afe said.
Several hours after disclosing the deal, HP unveiled 16 new multifunction printers targeted at A3 larger printer-copier combinations that are the stronghold of such companies as Xerox Corp., Canon Inc., Ricoh Co. and Konica Minolta Inc.
HP, created as part of the split of Hewlett-Packard Company, sells personal computers but gets most of its profit from supplying ink and toner for its printers. It is the market leader in the desktop printer business.
That business hasn’t been growing lately, in part because PC users print fewer pages these days. HP last month reported that revenue from ink and toner supplies declined 18 per cent in the third fiscal quarter from the year-earlier period, while printer hardware unit sales fell 10 per cent.
The Chief Executive of HP, Dion Weisler has vowed to spur revenue growth by expanding in A3 printing markets, a business HP estimates has $55 billion in annual revenue and which it has tried to crack before with little success. Samsung already has a business selling A3 machines, which HP acquired in the deal.
HP also acquires through the deal, the ability to manufacture the crucial mechanisms inside laser printers, known as printing engines. Samsung developed the printing engines used in its own laser printers, while HP has always used external suppliers for these components.
President of HP’s Imaging and Printing business, Enrique Lores, said acquiring printer-engine technology would bolster its profit margins and help it shape the evolution of its laser printers. “What is important for us us that we will have control over the core technology,” he said.
Canon is HP’s main supplier of printing engines in its existing product line, a relationship, Lores said he expected to continue. HP’s new A3 laser printers rely on Samsung’s print engine.
Beyond helping HP enter the market for A3 machines, he said, the deal would likely help winnow the number of suppliers in the market.
“We see HP as a consolidator in the market,” Lores said. “We want to drive this consolidation and make it happen.”
The deal includes about 6,500 Samsung printing-related patents, which Lores said would also help HP expand its business. Around 6,000 Samsung employees will join HP, including about 1,500 engineers, he said.
Samsung, it was gathered, has been cutting down on its business portfolio under its Vice Chairman, Lee Jae-yong.
The world’s top maker of smartphones, memory chips and refrigerators, Samsung ranks fifth in the world-wide market for printers and copiers by shipments with a four per cent market share, behind global majors HP, Canon, Seiko Epson Corp. Samsung’s shipments declined by 8.9 per cent in the second quarter compared with a year earlier, according to research firm, International Data Corporation (IDC).