Hewlett Packard to take over Samsung printer business

HP Inc.’s planned acquisition of Samsung’s printer business looks to disrupt the traditional copier industry.

The transaction should help the company provide value-add to customers through reduced machine servicing and printing costs.

With respect to the company itself, the acquisition should help expand margins, accelerate growth, slightly consolidate the industry, and enhance its business partnership with Canon.

Last week, HP Inc. announced its plan to acquire Samsung Electronics’s printer/copier business for $1.05 billion.

HP believe the transaction has many strategic and financial factors going in its favor.

The $55 billion copier industry is a mature, service-intensive segment that a bigger player like HP can disrupt by onboarding the right intellectual property. Samsung owns approximately 6,500 printing technology patents and HP will have the benefit of picking up 1,300 researchers and engineers who specialize in the field. HP believes that with Samsung’s assets it can revive an industry that is largely stagnant, has improved little technologically over the past decade, and rife with product offerings that possess unnecessarily high costs of servicing. Management asserts that the number of serviceable parts in its newest printers will be approximately seven versus 24 for traditional copiers.

Samsung’s printing unit is a higher-margin segment relative to HP’s core operations and also offers immediate cost-cutting opportunities. HP CEO Dion Weisler expects the transaction to be accretive to earnings within the first twelve months. HP also intends to complete the purchase using offshore cash, given the tax disincentives of repatriating the cash back to the US. Samsung’s South Korea domicile will benefit HP by expanding the company’s presence in Asia.