Lexmark employees want to block Apex acquisition

May 24, 2016

LexmarkLogo_RGB_300The workforce is concerned about National security and hacking.

Wirth Consulting have reported that they are in receipt of a copy of a letter sent to President Obama by a group named “Lexmark International for Ethical Conduct”, requesting that the President blocks the planned acquisition of Lexmark International by Apex Technology. Citing U.S. national security as a concern, the group said that this would be compromised. The apexlogoacquisition has to be approved by the U.S. Committee on Foreign Investment and has been but the group state that “The overall risk to (U.S.) national security is real, immeasurable and unpreventable unless the sale of Lexmark to a Chinese firm is disallowed.”

The letter is reported to be on behalf of 13,000 employees but is not signed by an individual. It requests the President to “intervene and block the sale of …Lexmark International to the Chinese firm Apex Technology…this sale should be disallowed due to extreme national security risks.” The letter also states that “unlike older analog copiers, because Lexmark copier/MFP/printers are “smart” digital copier/MFPs that are controlled by a PC operating system, they are vulnerable to hacking, noting, for instance, that they make a digital copy of every scanned document before printing it or transmitting it via fax or email; this stored information is vulnerable to being accessed by unauthorized user”.

In addition the employees state that “Apex will own hardware copyrights to Lexmark MFPs, they will have access to all device firmware source code, and have access to all source code for Lexmark workflow software,” and notes that “Lexmark also owns more than a dozen software companies whose workflow software is used by many thousands of companies’ document-workflow environments that include Lexmark MFPs. These software companies include Readsoft, which markets business-automation software, such as software for processing invoices”.

Other concerns are that Lexmark MFPs were used extensively by the “U.S. Department of Defence (DOD), U.S. Pentagon, U.S. National Security Agency, U.S. Central Intelligence Agency (CIA), U.S. Federal Bureau of Investigation (FBI), U.S. Homeland Security Agency, U.S. Transportation Security Agency (TSA), and U.S. Special Operations Command (the unified command for the worldwide use U.S. Army, Navy, and Air Force special operations), as well as U.S. state and local governments”.

The letter went on to say, in bold ink, that “Allowing a communist country access to Lexmark hardware and firmware allows them direct access ‘behind the firewall’ to any of these offices,” adding “Should any company (or government) have access to our hardware PCBA designs or firmware source code, they could easily install malicious code, viruses, or malware into these MFPs” and that “there would be no way to detect this malicious code or prevent wide-scale digital virus infections.”

The writers claim that the acquisition would lay bare companies from the private sector like banking, healthcare, and education as well as “most Fortune 500 companies.” Reinforcing their argument, the employees reminded the President that the DOD will not purchase Chinese Lenovo laptops because of national security concerns and said that “Lexmark MFPs have the same potential for harm as a determined hacker with unrestricted LAN (local area network) access that is sitting in the (U.S.) NSA (National Security Agency) offices.” They also claim that “older Lexmark MFP generations, that are in the field but are no longer being sold, specifically those code named SHaFT and Homestretch, are particularly susceptible to hacking,” due to the use of older technology like LINUX, saying that “Lexmark’s LINUX kernel is posted publicly as is required by the LINUX community.”

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Lexmark issuing “threatening” letters to remanufacturers

May 11, 2016

LexmarknewlogosignThe OEM is sending out letters to companies involved in previous legal cases “to find out if they are abiding by the law”, with the I-ITC describing the letters as having a “chilling effect” on the industry.

A source in Asia told The Recycler, and the International Imaging Technology Council (I-ITC) reported that Lexmark has begun to send more “threatening” letters to “previous remanufacturers that it has sued to find out if they are abiding by the law as set forth by the Federal Circuit of Appeals”. The I-ITC noted that “so far, no letters have been reported being received by remanufacturers who weren’t part of Lexmark’s earlier litigation, but the chilling effect on the industry is palpable”.

The letters relate to the case won by Lexmark in the US in February this year, which began when remanufacturer Impression Products was named in an IP infringement case in October 2013. The case referred to “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of infringing remanufactured and cloned aftermarket cartridges, with the remanufacturer moving to dismiss claims and overturn the Jazz Photo decision that impacts on patent exhaustion, or the “first-sale doctrine”.

This was also influenced by the Kirtsaeng case in 2013, and Impression’s case went to the appeals circuit, with Lexmark opposing a ruling it had exhausted patent rights in its Prebate programme. Impression also wished to overturn a ruling that it had infringed Lexmark’s patents relating to remanufactured cartridges that used empties from outside the USA.

However, the ruling decided Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, as well as that it was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”.

Appeals supporting Impression were heard in October 2015, including from Google, Intel, Dell and the New York Times, and legal experts had predicted a win for the remanufacturer last year, with some attacking Lexmark’s “baffling” case. Recently, the Electronics Frontier Foundation (EFF) filed an amicus, or friend-of-the-court brief, in support of Impression, and the I-ITC has now done the same.

The association noted that Lexmark’s action with the letters “further underscore[s] the need for the US Supreme Court to hear Impression Products’ appeal, and even more the need for the I-ITC to support its efforts”. It also added that the case needs to “clear up the confusion that the lower court’s decision created for commerce”, pointing out that “at issue in the case is whether a manufacturer of original computer printers and consumable supplies can impose a patent license on new cartridge buyers to thwart competition from remanufactured used laser toner cartridges”.

The Recycler’s source added that the letters are similar to those sent out a few years ago concerning other legal cases, but that no specific patents are mentioned, only a series of printers in the OEM’s MX, T, E and C ranges in which infringing aftermarket cartridges can be used, as well as the OEM’s return programme for original cartridges.

 

 

 

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US construction company mixes toner with asphalt

May 9, 2016

Lexmark is providing toner to APM, who use it in tarmac for roads.Overlay_REV_56e318b2cf549

Lexmark and Close the Loop (CtL), a “clean tech and resource recovery company for imaging consumables” based in Hebron, Kentucky, have been working together on ideas for recycling toner powder in hot mix asphalt. CtL has a global reputation for recycling an assortment of materials, turning them into “environmentally friendly products”, and approached Asphalt Paving and Maintenance (APM), a contractor in Lexington who had previously done some work for Lexmark, reported Construction PROS.com.

Last year, APM became the first US contractor to use a mix containing an additive from recycled printer cartridges, winning the right to the job and testing the mix by paving half of a 17,000 square metre area in a car park with traditional mix, and the other half with the “recycled toner, called MTP”. MTP is produced by CtL, and is made of “100 percent recycled materials” including waste oils and shredded tyre rubber as well as waste toner powder. The project is significant, as “finding high volume sustainable reuse program[mes] for the powder has been an environmental challenge” worldwide.

Peter Kramer, President of APM, commented: “When we first heard about their product, we thought that it was a pretty interesting idea. We did some research and no one had installed a mix using this additive in North America, and we were intrigued to be part of the process for the first installation. We worked very hard for this project. It’s a unique product and a process and we’re really excited to be part of it.

“We’re very customer centric. We work hard to meet their needs and to come up with the best possible solution – not the cheapest or the easiest necessarily, but what’s best for what the customer needs. And that approach has opened some doors for us.”

 

 

 

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Latest remanufacturing guide now available

May 4, 2016

The new guide offers remanufacturers a step-by-step process for remanufacturing Lexmark’s C925 toner cartridge.

The Lexmark C925de

The Lexmark C925de

This latest guide, which you can view and download here, covers the various steps needed to remanufacture the cartridge, with the 925 toner cartridges used in a wide range of the OEM’s C925 printer range. The machines feature speeds of 30ppm and a print resolution of 600 x 600dpi, and the cartridges are said to be “just simple tubes”, with a “lot of questions” asked about them from the industry.

 The Recycler previously launched the Online Magazines and Guides page, where you can download or view all of our remanufacturing guides or wide-format quarterly online. Earlier this year, guides were released for the Xerox Phaser 3010 toner cartridge and Xerox Phaser 3610 toner cartridge; while in November and December 2015, remanufacturing guides for HP’s LaserJet Pro M201 and MFP M225 cartridges and LaserJet Pro M402/MFP M426 cartridges were launched.

In October 2015, The Recycler also launched five new remanufacturing guides for Xerox, Brother, Samsung and HP cartridges, and earlier this year, another guide for remanufacturing HP Inc’s LaserJet Enterprise M506/MFP M527 toner cartridge. All of the guides have been provided by Mike Josiah and the technical team at Uninet, and you can find all previously-released guides from The Recycler at the Online Magazines and Guides page.

 

 

 

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Lexmark’s latest quarterly results mixed

April 28, 2016

The OEM noted that revenue grew in its MPS and enterprise software units, but fell across the board despite the recent acquisition announcement.Lexmarknewlogosign

The results saw Lexmark reveal that revenue fell year-over-year from $852 million (€750 million) to $806 million (€709 million), and while revenue increased in both the MPS and enterprise software units, it declined in non-MPS revenue and the ongoing inkjet exit was also a factor. In more detail, the MPS unit saw revenue grow two percent to $189 million (€166 million), while enterprise software grew 60 percent to $143 million (€125 million).

The imaging supplies unit meanwhile saw a fall of 13 percent to $669 million (€588 million) in revenue, and non-MPS revenue fell 14 percent to $460 million (€404 million), while inkjet exit revenue fell 58 percent to $20 million (€17 million). Lexmark commented that the results “reflect growth in MPS and enterprise software offset by the strong US dollar”, and “decline in non-MPS revenue and the ongoing exit of inkjet”.

One particular growth area was the higher value solutions unit, with revenue growing 21 percent to $332 million (€292 million), and the OEM added that this revenue “accounted for 41 percent of total revenue”, an increase from 32 percent last year”. Lexmark also referenced the recent acquisition deal with Apex, pointing out that the deal is “the result of an exhaustive six-month strategic alternatives review” undertaken to “maximise shareholder value”.

The merger is “expected to close in the second half of 2016”, but is first “subject to approval by Lexmark shareholders, foreign and domestic regulatory approvals and other customary closing conditions”. The OEM will “not conduct quarterly conference calls” during the pending period, and upon closure of the deal, its stock “will cease to be publicly traded on the New York Stock Exchange”.

 

 

 

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Mexican workers take down protest camp

April 27, 2016

After five months and a settlement agreement with Lexmark, the tent village has been taken down.

rer130415k/A112.30.2015/ Roberto E. Rosales/Journal Workers who were fired by the Lexmark Company in Ciudad Juarez have staged a protest in front of the company. They were fired for demanding a raise in wages. Pictured is a makeshift tent located just steps from the entrance to a factory. Ciudad Juarez, Mexico(Albuquerque Journal)

The protest camp in Ciudad Juarez, Mexico (credit, Albuquerque Journal)

The encampment was built to maintain the protest about the firing of workers who were demanding more pay in the printer cartridge factory based in Ciudad Juarez. After five months and one week, a settlement agreement was reached, and Susana Prieto Terrazas, the attorney representing some 50 workers, said that there was little resistance left in the workers as “they didn’t have any way to support their families”.

Jerry Grasso, Lemark’s spokesman, added that “all we are saying in regards to (the) settlement question is that we have reached [an] agreement with our former employees”. He also stated that 75 workers were fired last autumn after “work place disruption”, which resulted in protests in support of the workers.

There has been unrest since last summer in the border town, where workers from different plants have been asking for pay increase. The minimum wage in Mexico is 73 pesos ($4/€3) a day, Lexmark were paying 104 pesos ($6/€5) to 121 pesos ($7/€6)  and the workers wanted a rise of six pesos ($0.34/€0.30) an hour.

Attempts to unionise had been repeatedly blocked in the courts, but Prieto Terrazas reported that “the workers are establishing a non-profit [organisation] instead”. This will be called [email protected] [email protected] de Ciudad Juarez A.C., or ‘maquila workers of Ciudad Juarez’, with the use of @ a Mexican way of omitting gender. The non-profit organisation will “work to denounce human rights and labour violations” in more than 300 factories in the city.

To prevent discrimination of members by companies, the membership will be undisclosed. Prieto Terrazas said that “the organisation will also fight for higher wages. We believe, in accordance with our own studies that the minimum wage should be between 250 and 300 pesos a day ($14/€12) and $17/€15), so that it’s really enough to pay for basic goods and children’s schooling. It’s very important that people don’t keep living in poverty”.

 

 

 

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More reaction to Apex-Lexmark deal

April 22, 2016

The OEM has announced how much “will be payable” should the merger “break up”, while a host of law firms have started investigations into the deal.apexlogo

The acquisition saw a consortium led by Apex Technology Co. Ltd. and PAG Asia Capital reveal a definitive merger agreement with Lexmark. The consortium agreed to acquire the OEM for $40.50 (€35.64) per share in an all-cash transaction worth approximately $4 billion (€3.5 billion), and the deal saw Lexmark’s share price “rally”, increasing by 13 percent to $39 (€34).

Lexmark announced that the acquisition “follows an exhaustive strategic alternatives review process focused on maximising shareholder value”, and allows it to continue to focus on “strategic initiatives while strengthening access to substantial market opportunities in Asia”. The company will remain headquartered in Lexington, Kentucky in the USA, and the acquisition was “unanimously approved” by the company’s board of directors.

Now, the OEM has stated, according to Reuters that should the merger break up “under certain circumstances”, it would pay a termination fee to the consortium of around $95 million (€84 million), while a host of law firms have taken up investigations into the merger in an attempt to represent stockholders who might want more money for their stock than the OEM has agreed with the consortium – a move that often accompanies deals of this type.

These include the following US firms: Harwood Feffer LLP; Johnson & Weaver, LLP; Brodsky & Smith LLC; Brower Piven; Robbins Arroyo LLP ; Tripp Levy PLLC; and Powers Taylor LLP. All the firms use the same language, noting that their investigations concern whether the OEM’s board of directors is getting a “fair price” for the stock in the acquisition.

 

 

 

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Appeals in Lexmark IP case continue

April 21, 2016

USSupremeCourtThe Electronic Frontier Foundation (EFF) has filed an amicus brief in the case, which the OEM won over remanufacturer Impression Products.

BoingBoing reported on the case, won by Lexmark in the US in February this year, which began when Impression was named in an IP infringement case in October 2013. The case referred to “unlawful importation […] the sale for importation and/or the sale within the United States after importation” of infringing remanufactured and cloned aftermarket cartridges, with the remanufacturer moving to dismiss claims and overturn the Jazz Photo decision that impacts on patent exhaustion, or the “first-sale doctrine”.

This was also influenced by the Kirtsaeng case in 2013, which prevented copyright owners from stopping imports and reselling content sold abroad. Impression’s case went to the appeals circuit, with Lexmark opposing a ruling it had exhausted patent rights in its Prebate programme. Impression also wished to overturn a ruling that it had infringed Lexmark’s patents relating to remanufactured cartridges that used empties from outside the USA.

However, the ruling decided Impression “infringed the patent rights of Lexmark […] when it imported Lexmark’s toner products back into the United States after they were first sold abroad”, as well as that it was “liable for selling refurbished Lexmark cartridges that were originally marketed for a single use under its return and recycle programme”. Appeals supporting Impression were heard in October 2015, including from Google, Intel, Dell and the New York Times, and legal experts had predicted a win for the remanufacturer last year, with some attacking Lexmark’s “baffling” case.

BoingBoing noted that the so-called “printer ink wars may make private property the exclusive domain of corporations”, because of Lexmark’s previous legal cases against the aftermarket to combat remanufacturing, and referred to the amicus brief filed by the EFF, which discussed the “two important rulings” at the centre of the case that give patent owners “a roadmap for undermining consumer ownership”, with consumers perhaps not even aware “about what notices were placed on goods earlier in their ownership history”.

Asking the Supreme Court to overturn the “dangerous ruling”, the EFF continues by adding that “because patent infringement generally does not require ‘intent’, you could find yourself liable for the use of goods that you purchased legally and that the patent owner has already been paid for”. It notes that the decision “undermines centuries of law upholding the right of individuals to use and resell their possessions”, and hoped that the court “restores our right to pawn the things we own”. Lexmark was recently acquired by Chinese aftermarket company Apex.

 

 

 

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Lexmark discusses acquisition by Apex

April 20, 2016

CEO Paul Rooke commented that the “exciting acquisition” is “in the best interests”, while the OEM’s share price rose after the deal was announced.LexmarkLogo_RGB_300

The acquisition saw a consortium led by Apex Technology Co. Ltd. and PAG Asia Capital reveal a definitive merger agreement with Lexmark. The consortium agreed to acquire the OEM for $40.50 (€35.64) per share in an all-cash transaction worth approximately $4 billion (€3.5 billion), and the deal saw Lexmark’s share price “rally”, according to MarketWatch, with shares increasing by 13 percent to $39 (€34).

Lexmark announced that the acquisition “follows an exhaustive strategic alternatives review process focused on maximising shareholder value”, and allows it to continue to focus on “strategic initiatives while strengthening access to substantial market opportunities in Asia”. The company will remain headquartered in Lexington, Kentucky in the USA, and the acquisition was “unanimously approved” by the company’s board of directors.

Paul Rooke, Chairman and CEO of the OEM, is “expected to continue to lead” it after the transaction is completed, and both its imaging solutions and services and enterprise software units, alongside its regional operations worldwide, are “expected to continue unaffected and benefit strategically and financially”.

The merger is expected to be sealed in the second half of the year, and is subject to approval from Lexmark’s shareholders, the US’ Committee on Foreign Investment, which reviews foreign investment deals for possible national security risks, and China, alongside “certain other foreign jurisdictions”.

Rooke commented: “This is an exciting transaction that Lexmark’s board of directors believes is in the best interests of our shareholders following an exhaustive strategic alternatives review process to maximise value. The transaction will benefit our customers and provide new opportunities for our employees.

“As part of the consortium, Lexmark will be able to reach the next level of growth and innovation, to the benefit of our customers, business partners and suppliers, faster than we could achieve on our own. With the consortium’s resources, we will be able to continue to invest in and grow the business to more fully penetrate the Asia Pacific market for hardware, software and managed print services.”

apexlogoJean-Paul Montupet, Lead Director of the Lexmark board, added: “This transaction represents the culmination of an extensive review process by the board of directors and the next step in Lexmark’s growth and transformation. We anticipate that the transaction will cause no disruption to our operations or our ongoing cost-savings initiatives, and will only strengthen the business.”

Rooke also told Business Lexington that “what we are announcing this evening is an outcome of our strategic review”, and when pressed on whether it might result in job cuts in Lexington, he commented that “with this transaction, we expect very few, if any”. He also expected “essentially business as usual”

Lexington Mayor Jim Gray added: “Lexmark’s corporate headquarters will stay in Lexington and they do not expect significant changes in employment. Lexmark and IBM before them have been valued members of our corporate community for many years. I look forward to a productive positive relationship between Lexington and Apex Technology and PAG.”

 

 

 

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Apex Technology acquires Lexmark

April 20, 2016

apexlogoA consortium led by Apex Technology Co. Ltd. and PAG Asia Capital, and including Legend Capital Management Co. Ltd., announced today a definitive merger agreement with global printing and imaging solutions provider Lexmark International.

The consortium has agreed to acquire Lexmark for $40.50 (€35.64) per share in an all-cash transaction with an enterprise value (including unfunded pension liabilities and disclosed restructuring costs) of approximately $4 billion (€3.5 billion).

Lexmark is a world renowned leader in printing, imaging and data solutions. The agreement will enable Lexmark to continue to focus on strategic initiatives it has embarked upon while substantially expanding its access to vast market opportunities in Asia.

“We are very excited for this strategic union between Lexmark and Apex. We believe it is most compelling as the two businesses are highly complementary to each other. Lexmark’s passion for excellence and unwavering commitments to customers, employees and communities represent a tremendous cultural fit for us,” said Jackson Wang, Apex Chairman.

“Apex has traditionally been successful in emerging markets and in cost-effective production. We are excited to work alongside Lexmark as they continue to invest in advanced technologies and solutions to best serve their customers and business partners, while simultaneously pursuing untapped opportunities in emerging markets particularly in Asia for future growth.”LexmarkLogo_RGB_300

“We are happy to partner with Apex for this strategic acquisition,” said Weijian Shan, Group Chairman and CEO of PAG. “With Apex’s knowledge in printers and PAG’s experience in buyouts, our consortium is a perfect combination and is uniquely positioned to work with Lexmark. We look forward to turning Lexmark into a market leader not only in the US but also in Asia.”

“Legend is fully confident in this landmark transaction,” said Xiangyu Ouyang, Managing Director of Legend. “As an investor specialising in the IT industry, Legend has worked closely with Chairman Wang’s team over the past decade. We have participated in and witnessed the thriving of Apex and we will continue to make constructive contributions to its development in the future.”

The transaction, which has been unanimously approved by Lexmark’s board of directors, is expected to close in the second half of 2016, subject to shareholder and regulatory approval.

Let us know your thoughts on the deal at [email protected].

 

 

 

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