Table of Contents

• EDITOR’S RAMBLE 🗣

• FEATURED REPORT 📰

• IN OTHER NEWS 🗞

• AROUND THE WEB 🌐

• STUFF THAT MIGHT HELP YOU 👌

EDITOR’S RAMBLE 🗣

Happy New Year!

First, a big THANK YOU to everyone who subscribed to the YouTube channel over the last week.

We came so close to hitting 10,000 subscribers – got to 9,900 – but I’m working on more videos this month to help reach this milestone (my first 2025 goal).

To thank you for subscribing, I’ve picked a winner at random to get an Amazon voucher.

Congratulations to Rahi Patel! 🎊 

- Idin

P.S. I shared a LittleLaw year in review (we wrote 80,000 words in 2024)

FEATURED REPORT 📰

🖨️ How Xerox is buying Lexmark (the smart way)

What’s going on here?

Xerox (a printing services company) is buying Lexmark International (a Chinese-owned printer company) for $1.5 billion.

Even though it was announced on 23 December, the deal won’t complete until the second half of this year. First, it’ll need approval from regulators and Lexmark's current owners.

Why did the deal make sense?

This deal was good for both companies for a few main reasons:

• Growth opportunities: Lexmark is a market leader in selling A4 colour printers. By combining Lexmark's colour printer expertise with Xerox's technology, they'll be able to offer better products and sell more, particularly in fast-growing markets like the Asia-Pacific region.

• Strategic fit: By joining forces, they'll reach more customers in different regions and be better equipped to support modern workplaces where people split time between office and home.

• Financial benefits: This deal will boost Xerox's earnings and cash flow immediately. They expect to save over $200 million within two years, which will help reduce their debt burden.

What was the financial structure of the deal?

Xerox is buying Lexmark for $1.5 billion — but they’re not just bank transferring them the entire amount in cash!

Xerox is using a combination of cash and debt to fund the deal (though the exact split between cash and debt isn’t known).

Why use both cash and debt?

Benefits of using cash: Xerox is using some of its own cash to fund the deal. This means they don’t have to borrow as much money, which would come with interest costs. However, companies will keep some cash aside to make sure they’ve got enough for day-to-day expenses or emergencies.

Benefits of using debt: For the rest of the costs, Xerox will take out a loan. This spreads the cost of the deal over a longer time period, helping keep cash available for other needs. Borrowing can make big expenses more manageable. If the company has a good credit rating, it might get a loan with a low interest rate, making borrowing affordable.

Using cash and debt together: Big deals like this often use a mix of cash and debt. It helps the company stay stable while keeping flexibility.

Imagine a company needs £1 billion for an acquisition.

Even if it has £1 billion in cash, it might use only £400 million of it. This lowers the upfront cost without draining all its savings.

The company then borrows £600 million at a 5% annual interest rate. Over 5 years, it will pay £150 million in interest (£600 million × 5% × 5 years).

If it had borrowed the full £1 billion, the interest would have been £250 million.

By using both cash and debt, the company saves £100 million in interest and keeps cash available for other needs.

What other factors go into the financing?

Lexmark’s existing obligations: Lexmark already has debts (like unpaid loans), which the buyer will inherit as part of the deal. Think of it like buying a business and taking on its credit card balance – you're not just paying the price to the seller — you're also responsible for settling the company’s debts. This means the total cost to Xerox (the buyer) reflects both the purchase price paid to the seller and Lexmark's existing debts — but the amount Xerox pays directly to the seller will be reduced by the value of those debts.

Savings from the deal: As a result of the deal, Xerox plans to boost its earnings per share and cash flow. Over two years, it expects to save over $200 million by cutting costs. This extra money will help pay down the debt taken out for the acquisition.

Dividend cut: Starting this year, Xerox will reduce its annual dividend from $1 to $0.50 per share. This means shareholders will be paid out less money from the company — and the money saved can be used to pay off debt. While shareholders might not like this, the company believes they’re still getting a fair return and it will support the company’s long-term financial health.

Which law firms were involved?

Xerox were represented by Ropes & Gray and Willkie Farr.

The legal advisers for Lexmark's sellers were Dechert and King & Wood Mallesons.

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IN OTHER NEWS 🗞

• 👋 DG Innovate (a sustainable transport company) is delisting from the London Stock Exchange. The reason? A lack of investor demand for early-stage companies. Despite making progress, the firm says UK institutional investors aren’t interested in businesses at their stage. The move highlights the ongoing struggles for the London Stock Exchange, which saw 88 firms leave or transfer their listings this year! (we wrote about the plans to help with these issues)

• 🚗 Honda and Nissan are merging to fight back against China’s booming EV market. Together with Mitsubishi, they’ll share resources to compete with Tesla and Chinese car giants like BYD. Honda’s CEO warns they must act by 2030 to avoid being “beaten.” Nissan’s recent struggles (including job cuts and past scandals) add pressure to this plan.

• 🍋 Thatchers (a cider brand) is fighting with Aldi over claims the supermarket’s copying them. The High Court decided Aldi didn’t infringe Thatchers’ trademark with a cloudy lemon cider called Taurus. Thatchers argues Aldi’s product looks too similar to its own, pointing to shared yellow-green colours and a creamy-yellow background. Experts say overturning the decision will be tough. Reply to this email if you think they copied 👇️ 

  

  Aldi's Taurus Cloudy Lemon Cider next to Thatchers Cloudy Lemon Cider

AROUND THE WEB 🌐

• 📰 Unbiased: The news analysed from multiple perspectives to see through media bias

• 🏙️ Twins: The Shard will share the title of the UK’s tallest building with a new skyscraper being planned

• 💡 Don’t ask: This site explains why NEVER say "hello" in online chats

STUFF THAT MIGHT HELP YOU 👌

• 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.