Gossip that Xerox Corp might be a target for Unisys Corp is probably wide of the mark, but Unisys faces the problem that if it wants to meet chairman Michael Blumenthal’s target of $20,000m annual sales by 1990 or 1991, it isn’t going to do it by buying up odds and ends like Convergent Inc, […]
Gossip that Xerox Corp might be a target for Unisys Corp is probably wide of the mark, but Unisys faces the problem that if it wants to meet chairman Michael Blumenthal’s target of $20,000m annual sales by 1990 or 1991, it isn’t going to do it by buying up odds and ends like Convergent Inc, where Unisys already accounted for a significant proportion of its annual business before the acquisition, so that one and one makes rather less than two when they are put together. Unisys is going to have to buy big to meet its target, and there are very few big companies available. NCR Corp is often mentioned, but the overlap would be very substantial and NCR does not intend to go quietly. Control Data Corp is clearly vulnerable, but it is questionable whether it would bring much of value to Unisys. Computer Sciences Corp is a sitting duck for anyone wanting to expand in systems integration, where Unisys already has the former Systems Development Corp, but CSC would only bring another $1,000m of business. As a significant customer now of Hitachi Ltd, Unisys might not find too much opposition if it moved for National Semiconductor Corp for the sake of its IBM-compatible mainframe business, but if it sold the chip side, that would again add less than $1,000m to sales, as well as spooking 2200 and A series customers. Which is why Xerox Corp is seen as an interesting target for Unisys: if it then sold the Xerox financial services business, it would still be left with $4,000m or so of information technology business, good, arguably under-exploited technology, a massive expansion of customer base, and very little product overlap. With Xerox shares standing at around $58, the whole company is valued at just under $6,000m, but the financial services business alone might fetch $4,400m, analysts contacted by the Wall Street Journal suggest, valuing the copier and computer business at less than $1,500m, or less than $14 a share for a business that in a takeover might go for $85 a share. Xerox is a bank these days is a sentiment frequently voiced, and if present management does not move to improve performance of the electronic side of the business and drive the assets harder, somebody else is likely to do it for them.
