Xerox to Buy Out Venture, Stopping Stock Buyback

Xerox Corp. on Friday said that it will pay about $1.5 billion to buy the remaining 20% stake in its 41-year-old Rank Xerox office equipment joint venture from Britain’s Rank Group.

Xerox suspended a $1-billion stock-buyback program to help fund the acquisition. Other funding sources include free cash flow and proceeds from the sale of its insurance units.

The purchase gives Stamford, Conn.-based Xerox sole ownership of the Marlow, England-based venture, which will be renamed Xerox Ltd. when the deal closes, the company said.

Xerox and Rank, a leisure and entertainment company, said Xerox would pay about $814 million on completion of the transaction, expected at the end of this month. The balance will be payable in two annual installments of $358 million. Xerox may pay an additional $98 million in 2000, based on profit performance by 1999..

Salomon Bros. Inc. estimated the price at about 10 times the venture’s 1997 earnings.

The transaction has been approved by the boards of both companies, Xerox said.

Since the company initiated its $1-billion buyback in 1996, the company has paid $406 million for 8.2 million shares.

Xerox formed the joint venture in 1956 and has controlled it since 1969, Xerox spokesman Judd Everhart said. Rank, which wants to focus on its core restaurant and entertainment business, had been eager to sell its remaining stake, Rank and Xerox executives said.

Xerox stock rose 62.5 cents to close at $67.25 on the New York Stock Exchange.