Lexmark acquisition completed: Rooke out, company exits software business

Lexmark’s acquisition by a consortium of Asian investors has been completed, and the company is shedding its enterprise software business, once the cornerstone of its business strategy.

Paul Rooke, the company’s president and chief executive officer, is out. He will be succeeded by David Reeder, formerly Lexmark vice president and chief financial officer. Reeder has been at Lexmark since 2015 and was formerly the chief financial officer at Electronics for Imaging and vice president and chief financial officer of Cisco’s Enterprise Networking Division.

Rooke had been with Lexmark since the company’s beginning in 1991 in various management positions. He became chairman of the Lexmark board of directors in April 2011 after being named president and CEO in October 2010.

Lexmark common stock has stopped trading on the New York Stock Exchange. The ending price was $40.49 on Monday with more than 5 million shares traded, compared with the average volume of less than a million. In the last year, the share price ranged between $23.36 and $40.49.

A news release from the company on Tuesday morning said that Lexmark’s corporate headquarters will be maintained in Lexington. With the shedding of the enterprise software business, it is unclear how many Lexmark employees will remain.

Lexmark spokesman Jerry Grasso said the company would not answer questions beyond its news release.

Lexmark was acquired by a consortium of investors led by Apex Technology Co. and PAG Asia Capital. Legend Capital Management company also is a member of the consortium. The $3.6 billion acquisition was announced in April, when Lexmark said it did not expect significant changes in Lexington employment.

That might no longer be the case as the company sheds its enterprise software group, a big part of the company’s growth in recent years. Rooke had said in April that all Lexmark business units, including enterprise software and imaging, would be unaffected.

In 2015 the company completed its biggest-ever purchase, of California-based Kofax Ltd., which the company hoped would give an increased competitive edge to the company’s Perceptive Software unit. The company was trying to become more of a broad-spectrum business solutions company.The acquisition appears to return it to more of a focus solely on imaging.

The company has 2,300 employees in Lexington and is one of the city’s largest private employers. The news release Tuesday said the company employs 13,000 people worldwide.

The news release did not specify whether Rooke resigned or was forced out.

Weijian Shan, chairman and CEO of PAG, said in a 2013 interview that in the companies acquired by PAG, leaders are not dispatched immediately.

“You negotiate a deal so that he will stay for a period of time until you are comfortable,” Shan said in 2013.

Shan, a former professor at the Wharton School of the University of Pennsylvania in Philadelphia, said in a November interview with the New York Times that his firm, with $16 billion under management, was looking for value in areas that are growing in the world economy. He said the Lexmark deal was appearing in part because the new owners want to raise the profile of Lexmark printers in the Chinese marketplace.

“If you look around the world, Asia is where the growth is,” Shan told the Times. He also said that China “is the most interesting market because of its growth.”

The enterprise software group, which Rooke had built as a way of diversifying Lexmark’s revenue stream by an aggressive series of acquisitions, is being rebranded to Kofax. The business will be sold while Lexmark and the consortium focus “on growing the imaging business, particularly in China and the Asia-Pacific region,” according to the release.

Lexmark’s office building in Lenexa, Kansas, which houses the former Perceptive Software division, was reported in May to be subleasing 25 percent of its buildings there, or as much as 60,000 square feet. Perceptive Software is now known as Lexmark Enterprise Software.

Shareholders holding shares directly through Lexmark’s transfer agent will get a letter of transmittal telling them how to obtain their money. Shareholders holding Lexmark shares through a broker’s account, investment dealer, bank trust company or other intermediary will receive payment through that account.

This story was originally published November 29, 2016 at 10:38 AM with the headline "Lexmark acquisition completed: Rooke out, company exits software business."