Xerox Corporation (XRX) recently completed the acquisition of the UK-based Concept Group for an undisclosed sum. This is the second acquisition of the company since the beginning of the year following the acquisition of California-based WaterWare Internet Services in January.
Situated in Livingston, Scotland and founded in 1984, Concept Group is a renowned supplier of digital document imaging solutions and technical services to more than 3,000 customers spread across Aberdeen to London through its nine operations.
With the acquisition, Xerox intends to strengthen its presence in the U.K.’s small and medium-sized (“SMB”) business market. As per agreement, Concept Group will initially manage the full range of Xerox office products and supplies, including all Phaser, WorkCentre and ColorQube printers and multifunction systems. It will also be responsible for the servicing of Xerox devices. Gradually it is expected to take over Xerox’s light production printing products.
Apart from U.K., Xerox eyes the SMB markets in entire Europe. In line with this strategy, the two other acquisitions – Irish Business Systems, Ireland; and Veenman, Netherlands in the past three years were made with an intention to develop and improve its distribution and channel capacity to enjoy a better competitive position and market coverage.
The company is also tempted to tap the growing opportunities in the emerging markets of Asia as well. The channel partnerships with Trigon and Global Imaging Systems are testimony to this.
However, availability of a large number of substitutes of Xerox products in the market along with worsening of the cash position may stall the long-term expansionary plan of the company. Thus, the company has a Zacks #2 Rank (Hold) rating in the short term and we are maintaining a Neutral recommendation on its shares in the long term.
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