Lexmark to Lay Off 700 Workers; Target of Class Action Lawsuit
Several Lexington, Ky.-based news outlets are reporting that Lexmark International announced its plans to lay off 700 — or 7% — of its 10,000 employee workforce worldwide during the next 12 months as part of a corporate restructuring of the company best known as a provider of laser printers, MFPs and related supplies; enterprise content management software; and digital documents services.
Lexmark’s Jerry Grasso told the local media that the staff reductions will work “to align company talent with our strategy to ensure future success. We are not talking about any country or location specifically,” he was quoted as saying.
It has been a very tumultuous past 24 months for Lexmark.
In November of 2016, the company was acquired in a reported all-cash deal for approximately $3.6 billion by a group of Chinese investors, including Apex Technology, PAG Asia Capital and Legend Capital Management. As a result, the former NYSE-listed firm then went private.
Lexmark Chairman and CEO Paul Rooke left the company after the acquisition was completed. He was succeeded by David Reeder, who first joined Lexmark as CFO in January 2015 after serving for about one year as CFO at EFI. Reeder eventually was named president and CEO of Lexmark. But he then resigned abruptly in June, 2017, citing “personal reasons.”
Lexmark Faces Class Action Lawsuit
The following month, a class action lawsuit was filed in U.S. District Court Southern District of New York alleging that Lexmark “made false and misleading statements and omissions” in 2014-15 that cost shareholders more than half a billion dollars. These included allegations that there were significant declines in demand and growth for Lexmark’s supplies business; that supplies revenue growth was not caused primarily by demand, but by advance buying ahead of scheduled price increases; that this buying practice resulted in excessive inventory levels at its wholesale distributors; and that, as a result of the foregoing, Lexmark’s financial statements were materially false and misleading.
Defendants in the suit reportedly include Lexmark International; Paul Rooke; David Reeder; Gary Stromquist, who had been an interim CFO; and Martin Canning, a former executive VP at Lexmark.
Also in July, Lexmark sold its enterprise software unit to private equity firm Thoma Bravo for an undisclosed amount, making it solely focused on its printer business. As part of the transaction, its Perceptive Software business, including Perceptive Intelligent Capture, Acuo VNA, PACSGEAR and Enterprise Medical Image Viewing, was sold to Hyland Software, an existing Thoma Bravo-owned enterprise content management software company. The Kofax and ReadSoft businesses created a newly independent Thoma Bravo portfolio company under the Kofax brand.