Xerox, a printing solutions provider, has announced that its board of directors approved an update to its dividend policy in anticipation of the closing of the Lexmark transaction, reducing the quarterly dividend to $0.025 per share ($0.10 per share annualized).
Accordingly, Xerox announced the declaration of a quarterly dividend of $0.025 per share on Xerox Holdings Corporation Common Stock. The dividend is payable on July 31, 2025, to shareholders of record on June 30, 2025.
In December 2024, Xerox announced a reduction to its dividend in conjunction with the planned acquisition of Lexmark, reflecting the prioritization of debt repayment following acquisition close. Since then, yields on Xerox publicly traded debt have risen, resulting in an increased cost of capital and placing greater value on the reduction of debt.
Further, an acceleration in the expected timing of the Lexmark transaction close and ongoing tariff and trade-related volatility have put a premium on flexibility.
“Consistent with our previously stated capital allocation priorities to reduce leverage post-closing, we believe reducing our dividend creates greater financial flexibility to deploy cash in the most accretive manner,” said Mirlanda Gecaj, chief financial officer. “The dividend remains an important component of our capital allocation policy as we continue to optimize our allocation framework ahead of the Lexmark acquisition close.”
Xerox reiterates its 2025 guidance and continues to expect the Lexmark transaction to be de-levering upon transaction close and immediately accretive to adjusted earnings per share and free cash flow. The company continues to expect synergies associated with the Lexmark transaction of at least $238 million, realizable within two years.
The combined run-rate cash flows of Xerox and Lexmark, along with cash derived from future synergies and forward flow proceeds, are expected to result in significantly improved EBITDA and free cash flow, enabling the reduction of debt toward the company’s targeted 3x gross debt leverage level. Xerox will re-evaluate its capital allocation priorities, including the amount of capital returned to shareholders, as gross debt leverage is reduced.
The board also declared a quarterly dividend of $20.00 per share on the outstanding Xerox Holdings Series A Convertible Perpetual Preferred Stock. The dividend is payable on 1 July 2025, to shareholders of record on 15 June 2025.
Just before last Christmas, Xerox had announced its intention to acquire Lexmark International for US$ 1.5 billion, inclusive of net debt and other assumed liabilities, which Xerox will finance with a combination of cash on hand and committed debt financing. As part of this deal, Xerox has cut its annual dividend from US$ 1 per share to 50 cents per share for the next financial year to help manage its debts.
