Lexmark International Inc. said Friday it is considering “strategic alternatives to enhance shareholder value,” basically confirming media reports that the Lexington-based printer and services technology giant was seeking to sell itself.
In a news release, Lexmark said its board of directors has determined the company is undervalued and is working with Goldman, Sachs & Co., Ernst & Young LLP and the law firm Wachtell, Lipton, Rosen & Katz to explore options.
Lexmark will not be commenting on the process until it concludes or “the Board approves a specific transaction.”
Wall Street greeted the news positively. By late morning, Lexmark’s stop was up nearly 7 percent, trading above $35 per share.
"I've spoken with Lexmark's CEO Paul Rooke. and he assures me Lexmark will continue to keep its employees at the top of its decision-making," Lexington Mayor Jim Gray said in a statement. "That's been its record as the company has experienced many changes since it was once a part of IBM."
Lexmark’s news release detailed the bright spots in the $3.7 billion company’s recent operations, including growth in key sectors such as its software and managed print services divisions.
However, news of Lexmark’s apparently seeking a suitor also comes after a tough financial quarter and the announcement of job cuts.
In July, Lexmark said it planned to cut 500 jobs worldwide after reporting lower earnings for the second quarter. For the quarter, the company took in $891 million, down from $894 million during the same period in 2014. Earnings per share also fell, to 97 cents from 99 cents.
At the time, Lexmark CEO Paul Rooke said the restructuring — including the job losses — was a result of recent high-profile acquisitions. Chief among these were the recent purchase of two software companies: Sweden-based ReadSoft and California-based Kofax Ltd.
The Kofax deal in particular looked likely to produce job overlap. That deal was valued at $1 billion and essentially doubled the size of Lexmark’s Enterprise Software division.
Rooke said then that the cuts would come from a variety of disciplines, and that it would affect its worldwide workforce of 12,000 to 13,000 workers.