Lexington, Ky.-based based Lexmark is being acquired by a consortium of investors led by China's Apex Technology and PAG Asia Capital in a deal worth $3.6 billion.

The announcement ends months of speculation about the fate of the company, an enterprise content management vendor and laser printer maker.

Lexmark confirmed the sale in a statement last night that indicated the consortium is paying $40.50 per share. That represents a 16.8 percent premium on the share price, which closed yesterday at $34.66. 

The all-cash transaction is expected to close later this year, pending regulatory approvals by bodies including the Committee on Foreign Investment in the United States (CFIUS).

Zhuhai, China based Apex designs, manufactures, and markets inkjet/laserjet cartridge chips for remanufacturers and distributors.

Stalled Transformation

Lexmark describes itself as an "imaging solutions and services and enterprise software" provider. Weijian Shan, group chairman and CEO of PAG, calls it a "global leader in printing technology and enterprise software."

The discrepancy may be indicative of Lexmark's difficulty in transforming itself from a hardware manufacturer to a software/content management solutions provider quickly enough to make shareholders happy. 

Staying in the US

Despite the fact that it would no longer be traded on the New York Stock Exchange (NYSE), Lexmark executives promised it will be business as usual after the sale.

Paul Rooke, chairman and chief executive officer of Lexmark, noted the  company's operations are expected to remain in Kentucky. He said the firm will "benefit strategically and financially" — a statement that reflects the fact that Lexmark will profit from an infusion of cash and access to Asian markets where its products are not well known.

A Company in Transition

Lexmark is arguably best known for its acquired products including Perceptive Software, which first moved it into the ECM space, and Kofax, known for content, analytics, mobile and process management systems, mailroom automation and invoicing.

Gartner analysts Hanns Koehler-Kruener, Kenneth Chin and Karen A. Hobert named Lexmark a Leader in their most recent Magic Quadrant report for enterprise content management.

They praised it for its broad ECM portfolio, its vertically focused industry solutions and the positive feedback they got from Lexmark customers. Their main concerns were around the fragmentation in its portfolio (Lexmark also recently acquired Pacsgear, Twistage (video content management) and Acuo Technologies (vendor-neutral archive)). They also had concerns about its still evolving cloud architecture and noted that Lexmark had yet to address interoperability with other content management environments supporting standards including Web Distributed Authoring and Versioning (WebDAV), Open Document Management API (ODMA) and CMIS.

With an infusion of cash and time, these may be more easily resolved.

Gartner rated only EMC, OpenText and IBM higher than Lexmark.

ECM Consolidation

The news of the sale comes less than two days after OpenText's acquisition of HP’s CX assets. It comes on the heels of EMC's rumored attempt to sell its Enterprise Content Management Division (aka Documentum) and Box’s ascension to ECM provider.