HP Inc. agreed to buy Samsung Electronics Co.'s printer business for $1.05 billion, a deal designed to help bolster the Silicon Valley company in the market for high-volume devices that handle printing and copying for office work groups.

The transaction, which is subject to regulatory approval, is expected to close within 12 months, the companies said Monday. After it is completed, Samsung has agreed to make an equity investment of $100 million to $300 million in HP through open-market stock purchases.

Several hours after announcing the deal, HP unveiled 16 new multifunction printers targeted at the larger printer-copier combinations known by the designation A3, 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-class printer segment.

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%.

HP Chief Executive Dion Weisler has vowed to spur revenue growth by expanding in A3 printing, a market HP estimates at $55 billion in annual revenue that it has tried before with little success. Samsung already has a business selling A3 machines, which HP will acquire in the deal.

HP will also acquire 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.

Enrique Lores, president in charge of HP's imaging and printing business, said acquiring printer-engine technology would both bolster its profit margins and help it shape the evolution of its laser printers. "You have control over the core technology," he said. "That is very, very important."

HP Inc. agreed to buy Samsung Electronics Co.'s printer business for $1.05 billion, a deal designed to help bolster the Silicon Valley company in the market for high-volume devices that handle printing and copying for office work groups.

The transaction, which is subject to regulatory approval, is expected to close within 12 months, the companies said Monday. After it is completed, Samsung has agreed to make an equity investment of $100 million to $300 million in HP through open-market stock purchases.

Several hours after announcing the deal, HP unveiled 16 new multifunction printers targeted at the larger printer-copier combinations known by the designation A3, the stronghold of such companies as Xerox Corp., Canon Inc., Ricoh Co. and Konica Minolta Inc.

The deal includes about 6,500 Samsung printing-related patents, which Mr. 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 has been slimming down its business portfolio under vice chairman and heir apparent, Lee Jae-yong, said Lee Sei-cheol, an analyst at NH Investment & Securities, adding that the deal can be seen as a bid to strengthen the South Korean company's better-performing areas.

By: DocMemory
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