HP to acquire Samsung printers

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HP, Samsung, samsung printers, business, India

HP Inc. agreed to buy Samsung Electronics Co.’s printer business for $1.05 billion, a deal designed to help the Silicon Valley company expand into 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. 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.

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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 the printers it sells. 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 per cent in the third fiscal quarter from the year-earlier period, while printer hardware unit sales were down 10 per cent.

Dion Weisler, HP’s chief executive, has vowed to spur revenue growth by moving into 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. 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.

Samsung has been slimming down its business portfolio and increasing its focus on its market among other technology companies.

The world’s top maker of smartphones, memory chips and refrigerators, it ranks fifth in the global hard-copy peripherals market by shipments with a 4 per cent market share, behind global majors HP, Canon, Seiko Epson Corp. and Brother Industries Ltd. Samsung’s shipments declined by 8.9 per cent in the second quarter compared with a year earlier.

Samsung doesn’t break out separate sales figures for its printer business, which falls under the consumer electronics division that sells televisions and home appliances such as refrigerators and washing machines. Last year, consumer electronics contributed to just 4.7% of the company’s operating profit, while the higher-profile smartphone and chip divisions generated 38.4 per centand 48.4 per cent, respectively.

By EB Bureau

 

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