Yesterday, the Xerox corporation (NYSE: XRX) announced the decision to split into two separate independent public companies. The choice to split up was derived from the company’s falling revenues and profits. Ursula Burns, chairman and chief executive officer of Xerox stated “Xerox is taking further affirmative steps to drive shareholder value by announcing it will separate into two strong, independent, publicly traded companies”.
The two new companies will be split into the Document Technology company and the Business Process Outsourcing company. “The Document Technology company will continue to be a global leader in document management and document outsourcing with approximately $11 billion in 2015 revenue.” and “The Business Process Outsourcing (BPO) company will be an industry leader that helps clients improve the flow of work by leveraging its expertise in managing transaction-intensive processes and applying innovations to automate and simplify business processes. With approximately $7 billion in 2015 revenue”. Xerox shareholders have responded positively to the decision as the stock closed up $0.52 (5.63%) at $9.75 a share on Friday and up another $0.05 to $9.80 in after hours trading.
Individuals who are currently invested in Xerox should know Xerox is beginning the separation process as soon as they finish finalizing the transaction structure and “until the separation is complete, Xerox will continue to operate as a single company and it will continue to be business as usual for our customers and employees”, as stated on their company website. Xerox continues on to state their “objective is to complete the separation by year-end, subject to customary conditions, receipt of regulatory approvals, tax considerations, securing any necessary financing and final approval of the Xerox Board” and that “the transaction is intended to be tax-free to Xerox shareholders for federal income tax purposes”.
Disclaimer: The author does not hold any Xerox Corp. stock and the views in this article are a representation of the author’s opinion. Additionally, information in this article should not be taken as investment advice; please seek the advice of a finance professional.