Xerox To Sell IT Outsourcing Business To Atos For $1.05 Bln

(RTTNews) - Xerox Corp. (XRX) said Thursday that it has reached an agreement to sell its Information Technology Outsourcing business to French multinational IT services provider Atos SE for $1.05 billion prior to closing adjustments, with additional consideration of $50 million subject to the condition of certain assets at closing.

The deal is expected to close in the first half of 2015.

Xerox's Information Technology Outsourcing business includes about 9,800 employees in 45 countries, with 4,500 in the U.S. and more than 3,800 in global delivery countries. The Xerox ITO leadership team will join Atos. Xerox's existing ITO clients will gain access to Atos' global IT services capabilities and a broad range of services.

Also under the terms of the deal, Atos will provide IT services to Xerox.

As a result of the pending sale of the Information Technology Outsourcing business, Xerox expects to report the business as a discontinued operation. For full-year 2014, this represents an estimated net $1.3 billion in third-party Services segment revenue and an estimated $115 million in Services segment profit.

As a result, Xerox now forecast full-year 2014 earnings per share from continuing operations of $0.87 - $0.89 and full-year 2014 adjusted earnings per share of $1.04 - $1.06. Previously, the company forecast earnings from continuing operation of $0.93 to $0.95 per share and adjusted earnings of $1.11 to $1.13 per share.

For the fourth quarter 2014, Xerox expects earnings per share from continuing operations to be $0.24 - $0.26 and adjusted earnings per share to be $0.28 - $0.30.

Analysts polled by Thomson Reuters currently expect the company to earn $0.31 per share for the fourth quarter and $1.12 per share for the full year 2014. Analysts' estimates typically exclude special items.

Additionally, Xerox expects initial net after-tax proceeds from the deal of about $850 million and plans to increase its 2015 capital allocation for repurchasing shares to about $1.0 billion and up to $900 million for acquisitions.

To reflect the pending sale of the ITO business and its impacts in 2015, including the timing of use of proceeds, Xerox revised down guidance for full-year 2015 earnings per share from continuing operations to $0.88 - $0.94 and full-year 2015 adjusted earnings per share to $1.05 - $1.11. Previously, the expected full-year 2015 earnings in the range of $0.93 to $0.99 per share and adjusted earnings of $1.11 to $1.17 per share.

Analysts currently expect the company to earn $1.17 per share for the full year 2015.

Xerox does not anticipate earnings per share dilution beyond 2015.