Mergers and Acquisitions, Mergers and Acquisitions, Content, Small business

Xerox Acquires Digitex Canada for Direct MSP, SMB Customer Sales

Xerox has acquired Digitex Canada, a managed IT services provider (MSP) in Western Canada. The deal will require a careful balancing act between Xerox's direct sales ambitions and SMB channel partners. Financial terms were not disclosed.

This is M&A deal Number 141 that ChannelE2E has covered so far in 2020. See the complete M&A deal list here.

This is also Xerox's second M&A deal of 2020 involving an office equipment dealer and MSP in the SMB market. The other deal, from January 2020, involved Arena Group in the United Kingdom.

The Digitex and Arena Group deals raise questions about how Xerox will balance direct sales and channel partner sales -- particularly in the SMB (small and midsize business) market.

Xerox Direct SMB Sales

Xerox in February 2020 unveiled various IT services that specifically target SMB customers. Those direct-to-customer Xerox services include hardware procurement, professional engineering, IT product support, managed IT services, information security management and vCIO services. Roll it all together, and Xerox essentially is becoming an MSP to SMB customers.

Now, along comes the Digitex Canada acquisition, and Arena Group only two months earlier.

Digitex, founded in 1997, has 11 offices across Canada. The company's expertise includes printer hardware, services and supplies, document management solutions and managed IT services.

Digitex itself is an M&A veteran, The company acquired:

  • TOPS Imaging in December 2019 -- gaining offices in Kelowna and Kamloops, British Columbia, Canada. TOPS also was an independent office equipment dealer for Konica Minolta and Toshiba office products.
  • CDP Imaging Systems in December 2018 -- gaining offices in Winnipeg and Manitoba, along with office dealer expertise across Konica Minolta, Toshiba, and HP products.

Xerox Acquires Digitex Canada: Executive Perspectives

In a prepared statement about the deal, Mike Feldman, president of Americas Operations, Xerox, said:

"We're expanding our footprint in the fast-growing North America small and midsize business market (SMB) with our acquisition of Digitex Canada. With Digitex Canada's geographical presence, strong SMB customer base, and technology and services expertise, we are well placed to bring our growing portfolio of workplace technology solutions to new customers seeking a modern work experience."

Added Hugh Porter, CEO and president of Digitex Canada:

"Joining Xerox gives our customers access to the industry's most comprehensive portfolio that supports their digital transformation requirements and ensures a secure and sustainable experience."

Even as Xerox essentially acquires channel partners, the company remains committed to SMB channel partners, CEO John Visentin indicated during the company's January 2020 earnings call.

Xerox and HP: Similar Strategies, Separate Companies (So Far...)

Moreover, Xerox continues to pursue HP Inc. for potential acquisition. But HP has rejected multiple Xerox offers to date.

Ironically, HP has also acquired channel partners from time to time -- including the $500 million Apogee deal from August 2018.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.