NEW YORK:Xerox Corporation, a provider in document management services recently announced that it would acquire outsourcing entity Affiliated Computer Services for about $6.4 billion in a cash and stock deal

Both companies have entered into a definitive agreement in this regard and Xerox would be shelling out $ 63.11 per share for ACS.

With ACS, the copier giant would now expand into services such as collecting tolls and installing computer systems in government agencies, says media reports.

As per the agreement, ACS shareholders would receive a total of $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own.

Ursula Burns, Xerox chief executive, said in a statement that Xerox would become a $22 billion company, with $17 billion of that coming in the form of recurring revenues. Cerberus Capital Management tried to buy ACS two years ago for $6.2 billion, or $62 a share, but the private equity firm later withdrew the bid, which ACS rejected as too low. But those were the days before the big recession, and shareholders are likely to be quite happy with the deal, which provides $18.60 a share in cash and 4.935 Xerox shares for every ACS share. Xerox also assumes ACS' $2 billion in debt."

"With the economy kicking back in 2010 the timing is just right for Xerox to integrate ACS. Market dynamics might favor the integration process, and possibly accelerate it as well. Xerox will now combine the ACS's business of providing services to automate paper-based work processes with its own document management offerings, " Chandramouli, director-advisory Services, Zinnov Management Consulting.

He added that based on company information, the deal for Dallas-based ACS is expected to triple Xerox's services revenue to an estimated $10 billion next year from 2008's $3.5 billion. This is also going to be the sweet spot for exploiting synergies between these two companies.