Xerox Corp has agreed to buy Affiliated Computer Services Inc for about $6.4 billion in cash and stock in a deal that will boost the size of its services business and take it another step away from its roots as a printer company.

In a deal announced Monday, Xerox said it will pay $63.11 per share for each ACS, creating a $22 billion business that combines Xerox’s document management services with the business process outsourcing of Dallas-based ACS.

The price is a 33 per cent premium over ACS’s closing stock price on Friday. Xerox shares fell 97 cents, or 10.7 per cent, to $8, in premarket trading while ACS shares jumped $9.10, or 19.3 per cent, to $56.35. In a statement, Xerox CEO Ursula Burns called the deal a ‘game-changer’ that “helps us expand our business and benefit from stronger revenue and earnings growth.” The acquisition marks the first big move by Xerox since Burns took charge of the company July 1. Although financially healthy, Xerox has been hurt by the slowdown in supply and equipment spending by businesses during the recession. Apart from selling printers, most of its revenue comes from leasing equipment and charging for supplies and document management. Xerox said buying ACS will triple its services revenue to an estimated $10 billion next year. ACS, a $6.5 billion company, had fiscal 2009 revenue growth of 6 per cent and new business signings of $1 billion in annual recurring revenue. ACS stockholders will receive $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own.

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