Originally posted in CRN.com By Steven Burke on Sept 9, 2016
Samsung Electronics, which has been divesting non-core businesses, is considering selling its printer business to HP Inc. in a deal valued at $1.8 billion, according to a report in the Seoul Economic Daily.
The newspaper quoted an unnamed senior Samsung source as saying the Korean firm will likely announce a decision on the potential sale by next week.
Spokespeople from Samsung and HP declined to comment.
An HP acquisition of the Samsung printer business would take out a competitor and give HP strength in different geographies, said Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., one of the top channel investment advisory deal makers.
“This would eliminate a competitor, which may help on selling price,” said Wolf. “Margin will be impacted by meaningful cost take-out.”
The deal would also give HP more strength with its partners – another reason to make a deal, said Wolf.
HP Is by far the dominant player in the printer market with a 39 percent worldwide market share in the first quarter of 2016 in what market researcher IDC calls the worldwide hardcopy peripherals market.
Samsung, meanwhile, was No. 5 in worldwide market share in the first quarter of 2016 with 4.4 percent market share, according to IDC.
[highlight type=”one”]Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 167 on the 2016 CRN Solution Provider 500, said the only value for HP in buying Samsung is taking the company out in a share capture bid. “HP has their own printer intellectual property,” he said. “I don’t see the value for integrating Samsung into that.”[/highlight]
The CEO of a top HP partner, who did not want to be identified, said if HP is interested in the business there is surely a strong payback. “The HP Inc. team is very smart,” he said. “They wouldn’t be thinking about doing this unless it was a good deal.”
The potential sale comes with turmoil in the printer market, which declined 10.6 percent year over year on shipment of 23.11 million units in the first quarter of 2016, according to IDC. Inkjet printers experienced a year-over-year decline of 11.1 percent, according to IDC, while the laser market declined 10.5 percent compared with the year-ago period.
The potential sale comes as several of HP’s largest competitors are mired in uncertainty. Xerox is splitting in two, and Lexmark has agreed to a merger with a group of investors led by Chinese manufacturer Apex Technology for $3.6 billion.