HP has entered a deal to purchase Samsung Electronics’ printer business for $US1.05bn in a bid to help the company expand its printing business to the A3 market.
The transaction is subject to regulatory approval and both companies have confirmed it will close within 12 months.
Through the acquisition, HP will be looking to expand its reach into the larger A3 market to rival companies already dominant in this space, such as Xerox, Canon, Ricoh and Konica Minolta. Samsung has already entered this market, which will be taken over by HP as part of the deal.
It is not known at this stage whether HP will be looking at the production print market, Samsung at present has virtually no presence there, but it will likely be on the agenda given the massive market that the big four Fuji Xerox, Canon, Ricoh and Konica Minolta have carved out for themselves.
HP is considered the market leader in desktop-printer segment and its biggest cash cows are ink and toner refills for the printers it sells.
However, HP is reporting its printer segment has taken a hit in recent years due to PC users printing out fewer pages. This has contributed to an 18 per cent decline in the company’s ink and toner supplies in the third fiscal quarter compared to the year prior, and its printer hardware unit sales also saw a 10 per cent drop in revenue.
Through the acquisition, HP will be looking to expand its reach into the larger A3 market to rival companies already dominant in this space, such as Xerox, Canon, Ricoh and Konica Minolta. Samsung has already entered this market, which will be taken over by HP as part of the deal.
HP will also acquire Samsung’s manufacturing capability of printing engines, where previously it used eternal suppliers for these parts.
Samsung has agreed to the deal as it looks to downsize its business portfolio and place a keen focus on its smartphones, memory chips and refrigerators.
Samsung’s printer business falls under a wider consumer electronics division which contributed a modest 4.7 per cent of the company’s operating profit last year, while its lucrative smartphone and chip divisions brought in 38.4 per cent and 48.4 per cent, respectively.
Through the deal, HP is expected to obtain 6,500 of Samsung’s printing-related patents and take on 6,000 Samsung employees.
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