HP will purchase Samsung's printer business for no less than $1.05 billion, a deal which should improve the company's footprint in copying and printing for office-based work groups.
The deal needs regulatory approval in order to come into effect, and the process is estimated to last about 12 months.
After te deal gets green-lighted, Samsung promised an investment ranging between $100 and $300 million in HP, via open-market purchases of shares.
Despite its solid arm in personal computers, HP gets the majority of its profit share from supplying toner and ink for its printers. Keep in mind that the company ranks first in the desktop-class printer market segment.
However, that side of the enterprise has been stagnant of late, as PCs are using printers less and less. In August, HP noted that its ink and toner revenue dropped by a whopping 18 percent in Q3, while its sales of printer hardware dipped by 10 percent.
HP's CEO, Dion Weisler, affirmed that his company will hit revenue growth by focusing on larger printer-copier devices (A3 format for our designer readers). HP will face harsh competition in the area from the likes of Canon, Xerox, Konica Minolta and Ricoh.
Within the printer deal, HP will receive the Samsung line of A3 machines, as well.
What is more, HP will get access to the manufacturing part of laser printers, aka printing engines. One major difference between Samsung and HP is that the former crafted its proprietary laser printers, printing engines included, while the latter traditionally relied on external suppliers. Despite the reliance on outward sources for its hardware, HP managed to build some of the best home printers on the market.
Enrique Lores, the helm of HP's imaging and printing business, affirms that his company should see boosted profit margins after the acquisition of the printer engine tech. According to Lores, controlling the core technology of the printers is crucial to improving them.
Inside the deal, Samsung will concede close to 6,500 of its printing-related patents, which should help HP broaden its business significantly. From the 6,000-strong Samsung workforce that will enter HP's ranks, nearly 1,500 are engineers.
Led by Lee Jae-yong, Samsung trimmed down its business portfolio while focusing more on its market among other tech companies.
The deal with HP will help the South Korean company to stay on target in its more future-proof areas.
Samsung is one of the global top manufacturers of smartphones, refrigerators and memory chips, and the enterprise occupies the fifth place in the hard-copy peripherals market. The first four companies are HP, Canon, Seiko Epson Corp. and Brother Industries Ltd.
Samsung bundles its printer business with its consumer electronics division, which markets TVs and appliances such as washing machines and refrigerators.
Seeing that the main part of Samsung's operating profit originates from its premium smartphone and chip divisions, it is no wonder that the company is attempting to shed parts of its consumer electronics division. In 2015, chips and handsets brought in 48.4 percent and 38.4 percent the operating profit respectively, while consumer electronics only scored 4.7 percent.
Experts estimate that Samsung's printer arm brings between $1 billion and $1.6 billion in yearly revenue.
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