Categories: Media Moves

Coverage: HP buying Samsung’s printer business

HP Inc. agreed Monday to buy Samsung Electronics Co.’s printer business for $1.05 billion in a deal designed to bolster its offerings in the market for high-volume devices that handle printing and copying for office work groups.

Don Clark and Eun-Young Jeong of The Wall Street Journal had the news:

The transaction, which is subject to regulatory approval, is expected to close within 12 months, the companies said on Monday. Samsung also agreed to buy between $100 million and $300 million in HP shares through open-market purchases after the business sale is completed.

Several hours after disclosing the deal, HP unveiled 16 new multifunction printers targeted at so-called 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 breakup of Hewlett-Packard Co. last fall, 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% in the third fiscal quarter from the year-earlier period, while printer hardware unit sales fell 10%.

Brian Womack of Bloomberg News reported that Samsung wants to focus on high-growth areas:

For Suwon, South Korea-based Samsung, the divestment is part of a longer-term push to focus on more high-growth areas.

“The sale of printers makes perfect sense because the world of paper is going away,” said Mark Newman, an analyst at Sanford C. Bernstein in Hong Kong. “Printers don’t have much future. It’s all going to be screens and Samsung is the biggest display maker in the world.”

The printer deal is expected to close in about 12 months and is subject to approvals, the companies said. HP will receive more than 6,500 patents from Samsung, Lores said, adding to its intellectual-property lineup. Samsung’s laser capabilities are more suited for the large copiers that are built for heavy use at company offices. HP relies on Canon Inc. for key laser technology in some of its printers.

Deal activity in the printing sector is picking up. Earlier this year, Lexmark International Inc. agreed to be acquired by an investment consortium led by Apex Technology Co. and PAG Asia Capital in a transaction that values the company at $3.6 billion.

Jonathan Vanian of Fortune notes the deal expands HP’s business in Asia:

With the acquisition, HP gets a big printing presence in Asia, as well as Samsung’s laser printing technology and around 6,500 printing technology patents. Samsung’s laser printing technology will be crucial for HP as it attempts to enter the copier machine market, which requires machines that can quickly print multiple copies, explained Tuan Tran, HP global general manager of office printing.

“Korea is going to be a very important site for the HP printing business going forward,” said Lores.

Last week, the Seoul Economic Daily reported that Samsung was considering selling its printer business as the Korean electronics giant faces tough competition from rivals like Epson, Canon, and yes, HP. The divestiture is part of a corporate overhaul by Samsung to better focus on its core smartphone, television, and memory chip businesses.

In 2013, Samsung said that it would concentrate on selling its printers and printing services to businesses, which the company believed was a better strategy than targeting consumers. Samsung does not disclose how much revenue its printing business generates.

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

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