When a business hangs up a “for sale” sign like Lexmark did in October 2015, it is inevitable that rumors and speculation on potential buyers will follow. After nearly six months of hearing (and writing) about different would-be buyers, I told myself “enough is enough” and vowed not to write any more about Lexmark’s purported suitors until an agreement was announced. So much for that promise.

Some sources say the latest would-be buyers for Lexmark’s hardware business are Lenovo and Ninestar. That these two Chinese firms, both of which have been mentioned in the same breath with Lexmark in the past, might potentially be angling to buy Lexmark’s printer, MFP, and supplies business is the kind of rumor writers like me cannot resist.

Rumor Recap

When announcing its third-quarter 2015 results, Lexmark stated that it planned to explore strategic alternatives to reverse its decline (see “As Laser Hardware and Supplies Sales Plummet in Q3, Lexmark Explores Strategic Alternatives”). Goldman Sachs was brought on to help Lexmark explore its options.

Since then, word on the street has been that Lexmark did not see enough interest from buyers interested in purchasing the company as a whole, so Lexmark may sell its software and hardware businesses separately. The first company named as a potential buyer of the hardware business was Konica Minolta (see “Acquisition Rumor and Investigative Report Roil Lexmark”). Then, Canon and Ricoh were rumored to be interested buyers (see “Lexmark Acquisition Rumors Continue in Advance of Earnings Announcement”).

Lexmark pushed back its fourth-quarter results announcement by about a month. But when Lexmark finally did announce its results in February 2016, the firm had no news to report on the acquisition front (see “Lexmark Announces Q4 and Full-Year Fiscal 2015 Results, No News on Strategic Alternatives”). Lexmark said it would remain in its “quiet period,” did not hold an earnings call with financial analysts and investors, and declined to comment on the exploration process other than to say it “is every pleased with both the progress and positive interest.” I saw no news on the acquisition front as news of a sort—to me it seemed to indicate that if Lexmark had indeed seen offers from anyone, that the offers were too low to accept.

Lenovo Rumor

The source for the rumor that Lenovo is interested in Lexmark is Australian website Channel News, which reported, “According to insider the world’s #1 PC Company is currently in discussions with the US based printer manufacturer Lexmark to acquire the Company who is currently retrenching staff globally.” The article added, “The aquisition [sic]of Lexmark would put pressure on Lenovo arch rival Hewlett Packard.”

As far as I can tell, this is the main source for the Lenovo story, although last fall Benzinga reported that both Lenovo and HP were bidders for Lexmark’s hardware business. A number of industry sites have since picked up on the Channel News story and are reporting that Lenovo may be interested in Lexmark. So how credible should we all find one typo-laden story citing unnamed insiders? Normally I’d say “not all that credible,” but the notion that Lenovo would be interested in acquiring Lexmark is plausible.

In fact, this is not even the first time that Lenovo has been rumored to be interested in buying Lexmark. As IBM sought to move away from commoditized hardware markets, the company sold its PC business to Lenovo in 2005. Lexmark, of course, got its start as part of this same effort; it was formed in 1991 when IBM spun off part of its printer business to a private equity group. In 2006, not long after Lenovo acquired IBM’s PC business, sites such as CRN reported that a Lenovo-led consortium backed by the Chinese government might make a bid for Lexmark, citing industry analysts from Lyra Research (in the interest of full disclosure, I used to work for Lyra).

However, not long after the Lenovo acquisition rumors began, they were laid to rest. According to a 2007 Reuters article citing analyst Shannon Cross of Cross Research, a sale of Lexmark was unlikely because of cross-licensing deals with Canon and HP on Lexmark’s inkjet technology. Another Reuters piece also citing Ms. Cross added that a restructuring at Lenovo to incorporate IBM’s PC business made such a deal doubtful, and indeed that was the end of things.

But could Lenovo be interested in Lexmark now? If true, Lenovo’s interest in Lexmark would make sense. Lenovo is already grown to become the world’s top PC maker, ahead of number-two HP, and Lenovo might believe its own line of printers and MFPs could help it win share from HP and others. A broader portfolio of products that includes MFPs could also help Lenovo to be more competitive for large corporate bids.

Ninestar Rumor

The rumor about Ninestar’s interest in Lexmark seems a bit dodgier. On April 5, the Recycling Times published an article titled “Apex-Ninestar to Buy Lexmark?” The article said that “all interested parties in the US have withdrawn from the bidding war,” so “all eyes turn to China,” and that in addition to Lenovo’s interest, “others, with some authority, are telling RT Media that the China-based Ninestar and Apex Microelectronics (Apex) group are hoping to snatch the iconic brand.”

Actionable Intelligence heard rumors that Ninestar was interested in Lexmark at the ITEX show. The scuttlebutt was that Ninestar CEO Jackson Wang was spotted in Lexington, KY, ergo, the logic went, his firm must be interested in buying Lexmark.

There are a few reasons why I think this rumor will probably in the end prove to be idle gossip. First, even if Mr. Wang was in Lexington, that does not necessary mean he was there to make a bid for Lexmark. If a visit took place, there could be reasons for that aside from extending an offer. Perhaps the firms were talking about intellectual property issues? (After all, Lexmark has sued Ninestar before.) Perhaps the firms were talking about some other type of partnership? Also, we found it interesting that Recycling Times appears to have pulled the piece about Apex/Ninestar’s purported interest in acquiring Lexmark, although fortunately we captured a screenshot.

There is also the issue of whether Ninestar/Apex could fund such a big acquisition. Lexmark has a market capitalization of nearly $2 billion. Of course, market capitalization is not the same as enterprise value, and we would assume Ninestar would just be interested in Lexmark’s hardware business. Still, this would be a big acquisition for Ninestar. We have heard that the firm is in the midst of making other deals in China, and other acquisitions might impact Ninestar’s ability to fund an acquisition of Lexmark’s size.

While I have to emphasize that there seems to be no real evidence that Ninestar is interested in Lexmark, anything is possible, and I can see definitely why the rumor has gotten people talking. Depending on your point of view, this story could be seen either as a powerful demonstration of the rise of Chinese aftermarket industry or a sign that the apocalypse is nigh (OK, OK, a slight exaggeration).

If Ninestar were interested in acquiring Lexmark, it would be a different way for the Zhuhai-based firm to go about fulfilling its dream of becoming a major printer OEM. In 2007, Zhuhai Seine Technology, better known as Ninestar, obtained an investment from Legend Capital, owned by Legend Holdings. Legend Holdings is the controlling shareholder for the Lenovo Group, which was originally known as Legend Computer. This enabled Seine/Ninestar to license some technology from Toshiba and develop the Pantum line of laser printers. When these printers launched in 2010 (see “Ninestar Subsidiary Seine Technology Officially Launches Its Own Laser Printer Line”), the Chinese aftermarket supplies maker turned printer OEM had the lofty goal of quickly becoming one of the world’s top five printer OEMs. That clearly did not happen. The Chinese government placed units, but the Pantum line did not catch on to any significant degree outside the domestic market. Acquiring Lexmark would be another way for Ninestar to go about trying to achieve its nearly decade-long goal of becoming a major printer OEM in its own right.

It would be surprising to see an aftermarket firm like Ninestar acquiring a printer OEM like Lexmark, one that has been aggressive in its attempts to get infringing aftermarket products off the market. Ninestar was one of the firms Lexmark named as a defendant its 2010 toner cartridge litigation in the United States (see “Ninestar Settles Federal Case with Lexmark, Defaults in Related ITC Matter”). Lexmark was ultimately awarded a general exclusion order by the U.S. International Trade Commission (see “U.S. ITC Issues Final Determination in Lexmark Toner Cartridge Patent- Infringement Complaint”).

In its latest legal victory, Lexmark prevailed over Impression Products and got the Federal Circuit to uphold some previous decisions that are favorable for patent holders and unfavorable for the aftermarket (see “Federal Circuit Finds in Lexmark’s Favor, Upholds Jazz Photo and Mallinckrodt” and “Appeals Court Hands OEMs a Big Win, but Impact on U.S. Remans Will Be Limited”).

So viewed from this legal perspective, Ninestar acquiring Lexmark would be an excellent example of irony, and irony can be either bitter or delicious, depending on one’s point of view. I bet the inherent irony in this rumor has played a role in keeping this story going.

Who Knows?

So, in short, the list of potential buyers for Lexmark’s hardware business named in the press now includes a handful of rival printer/copier OEMs, a Chinese computer giant, and a Chinese aftermarket supplies firm.

Who will ultimately acquire Lexmark’s hardware business? Until news comes out of Lexington, KY, it will remain a guessing game. New names may emerge, and others will get crossed off the list. It may also be that nobody steps up to purchase Lexmark’s hardware business anytime soon.

Honestly, after hearing rumors of so many different buyers, I am suffering from candidate fatigue. At this point if you told me The Lord of the Ring’s Sauron was acquiring Lexmark, I would probably nod, say “makes sense,” and get busy writing about synergies and how Sauron’s army of orcs will be so much more productive now that they have Lexmark’s high-speed A4 MFPs.

As the months stretch on without news from Lexmark, it seems those in the industry can only guess about various who and what if scenarios.

[UPDATE: The plot thickens and the Apex/Ninestar acquisition rumor grows more credible! After this article was published, Reuters published a piece saying, “Apex Technology Co Ltd, a Chinese company that manufactures ink cartridge chips, is in negotiations to acquire U.S. printer and imaging systems provider Lexmark International Inc., according to people familiar with the matter.” Apex apparently is interested in acquiring Lexmark as a whole. We might all have to prepare ourselves for a taste of bitter/delicious irony! In other news, the exact same Recycling Times piece on interest in Lexmark from Leonvo and Apex/Ninestar that was originally published on April 5 and pulled from the site on April 6 has now once again been posted on April 7.]

[UPDATE: On April 19, Lexmark officially announced that the entire company will be acquired by a consortium of Chinese investors led by Apex Technology, PAG Asia Capital, and Legend Capital. See “It’s Official: Apex to Acquire Lexmark.”]