Productive Business Solutions Limited (PBS) is set to acquire Xerox Holdings Corporation’s businesses in Peru and Ecuador later this year as Xerox undergoes a reorganisation to simplify its operations and improve its profitability.

The news was announced by Xerox on Tuesday who expects the deal to close by the end of the second quarter once authorisation from the Ecuadorian competition authority is received. PBS was formed as a joint venture between Musson (Jamaica) Limited and Seprod Limited in 2001 to acquire the business and assets of Xerox Jamaica. Since then, PBS has been acquired at least 10 Xerox businesses across Latin America and the Caribbean while also forming additional partnerships that have led to it becoming the largest Xerox distributor in the Western Hemisphere. Xerox sells print and digital document product and services in more than 160 countries with three-fifths of its revenue coming from services, maintenance and rentals.

“In today’s business environment, organisations need support from partners who have a deep understanding of regional market dynamics and who can respond with maximum speed and agility. This indirect model with PBS will best support our clients in region while allowing Xerox to put greater focus on developing and deploying digital services capabilities to diversify our channel-ready offerings. We thank our dedicated Xerox employees for their commitment and hard work over the years and look forward to following their continued success,” said John Bruno, president and chief operating officer at Xerox, in the news release.

Xerox’s sale of Xerox del Peru, SA and Xerox del Ecuador, SA comes amidst a sharp decline in financial performance over the last five years. In 2019, Xerox reported US$9.01 billion ($1.18 trillion) in consolidated revenue along with net profit from continuing operations of US$651 million ($84.49 billion). That year also saw Xerox dispose of its 25 per cent indirect equity interest in Fuji Xerox for US$2.2 billion and its indirect 51 per cent partnership interest in Xerox International Partners for US$23 million. These businesses contributed US$710 million in net income from discontinued operations in 2019.

Fast forward to 2023 and Xerox’s consolidated revenue was down to US$6.89 billion ($1.06 trillion) with an operating loss of US$28 million ($4.3 billion). Its consolidated net profit came out to US$1 million ($153.59 million), but the net loss attributable to shareholders was US$13 million. The years 2022 and 2021 were no better as those years saw Xerox record US$322 million and US$455 million, respectively, in consolidated net losses driven by US$1.19 billion in non-cash goodwill impairments.

Xerox has now turned to a structural reorganisation to turn around the declining performance and improve its business capacity. Xerox announced a 15 per cent layoff of its 20,100 global workforce or 3,015 employees in the first quarter under its plans operating model evolution and company reinvention.

This company reorganisation will be done under three concurrent efforts to a 2026 target of US$300 million in adjusted operating profit and double-digit net profits. The first effort involves simplification throughout the reinvention journey; geographic and offering simplification by replacing direct operations with partner-led solutions in certain markets and a more simplified product portfolio and taxable investments and partnerships to grow their digital and IT service businesses to provide a more favourable revenue and profit mix.

“Our focus in this second year of our reinvention is to strengthen our core businesses, further reduce structural cost through reorganisations and allocate the more than $600 million of free cash flow we expect to generate in 2024 in a way that optimises total shareholder returns,” said Xerox CEO Steve Bandrowczak on their January 25 earnings call.

John Bruno was tasked with leading the enterprise alignment of print, digital services, and IT services businesses with Louie Pastor returning to Xerox as the chief transformation & administrative officer, charged with overseeing the Xerox Reinvention Office and the newly established Global Business Services organisation. Joanne Collins Smee, executive vice-president and president, Americas, and Tracey Koziol, executive vice-president of Global Offering Solutions and chief product officer, departed Xerox at the end of 2023.

Xerox’s asset base was US$10.01 billion with current assets making up US$3.18 billion, as cash declined from US$1.05 billion to US$519 million. Equity attributable to shareholders was down 24 per cent to US$2.54 billion.

The financial terms of the transaction with PBS were not disclosed in the news release but are likely to be expounded on in Xerox’s Q2 report by August. PBS does not provide expounded disclosures in quarterly reports on acquisitions or divestments and did not provide responses at their annual general meeting (AGM) in September about the value of their acquisition of Infotrans Group Holding BV. PBS’s 2023 audited financials have been delayed and should be published by April 30. General public shareholders of PBS will likely have to wait until April 2025 to know the full terms of the latest Xerox acquisition which will push its reach to 24 countries with 3,000 employees.

Although PBS’s audited financials are not available, its unaudited fourth quarter report revealed revenue increasing seven per cent to US$333.33 million with net profit attributable to shareholders coming in 35 per cent higher at US$11.34 million for 2023. PBS’s 2023 EBITDA (earnings before interest, tax, depreciation and amortisation) came in marginally higher at US$48.27 million. PBS’s total assets closed 2023 at US$402.93 million with equity attributable to shareholders at US$114.27 million.

While PBS’s stock price is up five per cent in 2024 to US$1.70 for a market capitalisation of US$316.56 million, Xerox’s stock price is down one per cent to US$17.80 for a market capitalisation of US$2.21 billion. PBS appointed Nicholas Scott as a director on March 7 and Brian Wynter as chairman of PBS audit committee on February 28.

US$1 – JM$129.7847 – 2019 FX rate

US$1 – JM$153.5857 – 2023 FX rate