Bangalore: The recent announcement regarding HP signing a definitive agreement to acquire Samsung Electronics’ printer business (read the story here) for about 1.05 billon US dollars has evoked a mixed response from the channel community with some wondering how HP plans to make money and others swearing by Samsung’s formidable product portfolio.
The story was quite clearly articulated from the HP side. Dion Weisler, President and CEO of HP said, “When we became a separate company just 10 months ago, it enabled us to become nimble and focus on accelerating growth and reinventing industries. We are doing this with 3D printing and disruption of the $12 trillion traditional manufacturing industry, and now we are going after the $55 billion copier space.”
He went on to add that the acquisition of Samsung’s printer business allowed HP to deliver print innovation and create entirely new business opportunities with far better efficiency, security, and economics for customers.
Channel partners hold the view that the deal could be a tough one for a player like HP who felt the need to find an alternative to their earlier technology tie-up with Canon. “There will a big impact. The running costs might go up and I am wondering what value does HP find in this deal,” says Mahesh Kurup, CEO of Ozone Computers, Coimbatore.
While the channel industry is sure that the deal would make a player to contend with across all the IT verticals, the costs of the acquisition could prove to be a limiting factor. It is true that they wanted to try something new, but is this it? Anyways, as partners we are awaiting to see what changes this acquisition would bring to our business, Kurup says.
It goes without saying that the current acquisition is the largest in HP’s history and would go a long way in accelerating growth options in the copier segment, besides strengthening its lead on the laser printing portfolio that came into being through the deal with Canon. It would also create new areas for growth and profitability for partners as they expand managed print services as sales models shift from transactional to contractual, some channel partners said.
Vinod Mulchandani, CEO of Aarvee Computers, feels that HP has been the leader in the printer business for some years and with this acquisition it will further strengthen its position in the laser print market. “Business will increase for all partners which is a good for all partners and new customers, resulting in overall revenue growth. What’s more, now we have one brand less in competition”, he quipped.
Samsung has built a formidable portfolio of A3 MFPs that deliver the performance of copiers with the power, simplicity, reliability and ease-of-use of printers and with as few as seven replaceable parts. Integrating the Samsung printer business’ products, including their mobile-first and cloud-first user experience, with HP’s next-generation PageWide technologies will create a breakthrough portfolio of printing solutions with the industry’s best device, document, and data security.
Samsung’s printer business also brings a compelling intellectual property portfolio of more than 6,500 printing patents and a world-class workforce that includes nearly 1,300 researchers and engineers with advanced expertise in laser printer technology, imaging electronics, and printer supplies and accessories to support continued innovation in print market solutions.
“HP Inc. has been a valued partner and customer of Samsung,” said Dr. Oh-Hyun Kwon, vice chairman and CEO of Samsung Electronics Co., Ltd. “We can now leverage our combined capacity for innovation to further enhance the value of our relationship.”
Acquiring Samsung’s printer business will also strengthen HP’s ability to service customers in global laser printing, a category where it has enjoyed a strong, mutually beneficial partnership with Canon for more than three decades. HP is confident this transaction will provide new opportunities to further strengthen and accelerate this highly valued relationship.
The acquisition is expected to be accretive in the first full year following closing, with cost synergies and a strong financial model. The transaction is expected to close within 12 months pending regulatory review and other customary closing conditions. After closing, Samsung has agreed to make a $100 million to $300 million equity investment in HP through open market purchases.