Lexmark wants to get deeper into the lucrative enterprise content management (ECM) space so, last night, it announced a merger with Kofax.
Under the terms of the merger agreement, Lexmark will acquire all of the outstanding shares of Kofax for $11 a share in cash for a total enterprise value of approximately $1 billion, net of cash acquired.
Once the deal is complete, Lexmark’s enterprise content and process management business will be worth approximately $700 million and a formidable force in the growing $10 billion content and process management software market.
Kofax, which provides content, analytics, mobile and process management systems, also automates things like mailrooms and invoices. It serves the financial, healthcare, government and insurance industries.
Growing by Acquisition
Many of us view Kofax as a technology that was used to capture and convert paper documents to electronic content in the early days of enterprise document management (ECM). But it does a lot more now via the components of the Kofax TotalAgility (KTA) platform.
While the company has developed some of these new capabilities internally, many were acquired.
In 2011 Kofax purchased Altasoft, a small software firm that provided its dotImage imaging toolkit, as well as business process management (BPM) and case management software firm Singularity Limited. In 2013, Kofax bought Kapow Software, a data integration and analytics software provider. Last September, it acquired SoftPro and its SignDoc software.
Earlier this month we reported Kofax had spent $19.5 million to acquire Aia, a customer communications management vendor based in The Netherlands.
In a recent interview with CMSWire, Russ Gould, senior director of Product Marketing at Kofax, told us Kofax has traditionally focused on building technologies to automate what it describes as First Mile business processes. That includes such things as loan applications, claims submissions and new account openings, and the challenge of interacting with a business via multiple devices and methods of communication.
In recent times, it has also focused on the Last Mile — the end of that process.
Lexmark entered the ECM space in 2010. That's when it bought Perceptive for $280 million to build out its document management capabilities through DocMP, an application which manages document workflows from capture to storage.
Even so, it has found it difficult to transform its image from a provider of print management software and hardware into one of a vendor that can offer a full, feature-heavy ECM with print management.
This buy could change that. Once it incorporates Kofax’s process automation technology into its portfolio it will be able to offer ECM along with fully automated process management capabilities.
In theory, at least, the deal closes off any of the holes in Lexmark’s portfolio giving it the muscle in the ECM space that it hasn’t had to date.
Learning Opportunities
Webinar
Mar
29
The CX Commute vs. the CX Joy Ride
Is your CX traffic holding up your customer's journey?
Webinar
Mar
29
Is Your Microsoft 365 Data Recoverable? How to Survive the IT Hotseat When Data is Lost
See why MIcrosoft recommends third party backup
Webinar
Mar
30
An Optimized Customer Contact Strategy Combines Transparency and Intelligence: The State of Outbound Communications
Learn from the Neustar-commissioned Forrester Consulting study on challenges and solutions for contact centers
Webinar
Apr
5
Adopt a Modern Digital-First Marketing Strategy
Learn how to use a composable DXP to your advantage
One Analyst's View
Writing about the Lexmark Kofax deal, Forrester analyst Craig Le Clair noted that Kofax’s current software assets seem to fill in the gaps in Lexmark’s offering.
“Kofax has indeed assembled a range of complimentary components that fit well with Lexmark's market ambition,” he said.
However, he warned that Kofax lags when it comes to its market positioning and execution, which he described as “nowhere near complete."
He added that Kofax "needs entrepreneurial energy" and better execution if it wants to accomplish its vision. And further questioned how Kofax, as part of a larger company that has transition issues of its own, will fare.
Lexmark, after all is spending a good amount of money to “purchase a legacy document capture business that has moderate long term value."
At the end of his evaluation though, Le Clair seemed mildly bullish on the merger/acquisition.
“Kofax has been a strong driver of Smart Process Apps (SPA) for lucrative use cases like mortgage, invoice, other areas,” he wrote. “Lexmark can help with deeper vertical market penetration and more developed business development and marketing teams that could accelerate what is a strong SPA strategy."
He suggested that customers let the dust settle before making any decisions. After all is said and done, Le Clair noted, we “will have perhaps the largest arsenal of technologies to help digitize their business. Something all companies need."
We’ll be looking to see what other analysts have to offer on the subject later today.
Title image by jlcwalker.
