By Carol Zhong and Greg Roumeliotis
HONG KONG/NEW YORK (Reuters) - 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.
The potential deal with Apex represents an opportunity for Lexmark to sell itself as a whole, after an earlier auction did not produce satisfactory offers. Lexmark has also been exploring selling its software and hardware assets separately.
While Lexmark sees Apex's approach as promising, it needs assurances that the Chinese company will be able to close the deal, the people said this week. Apex's executives are due to visit their counterparts at Lexmark in the United States this month to try to reach an agreement, one of the people added.
Apex is working with a U.S. investment bank and already has the backing of some Chinese banks, the people said, cautioning there was no certainty that a deal with Lexmark would materialize.
The sources asked not to be identified because the negotiations are confidential. Lexmark declined to comment, while Apex representatives did not respond to requests for comment.
Headquartered in the province of Guangdong, China's export and manufacturing powerhouse, Apex Technology is a supplier of printing cartridges and integrated circuit chips used in ink cartridges.
Like other printer makers, Lexmark has struggled to adjust as its corporate clients cut costs and consumers shift to mobile devices from personal computers.
Lexmark, which has a $2 billion market capitalization, announced in October that it was exploring strategic alternatives, including a sale, and had hired Goldman Sachs Group Inc as an adviser.
Over the past few years, Lexmark has sought to diversify and aggressively bought up software assets to bulk up its services catering to business customers. Last year it bought Kofax Ltd for about $1 billion, a company which provides data services to financial, insurance and healthcare companies.
At the time, Lexington, Kentucky-based Lexmark said the deal would double the size of its enterprise software unit to a $700 million business.
Lexmark's software can scan everything from spreadsheets to medical images, and provides services to banking, healthcare, insurance and retail companies. While the software business has a higher growth rate, it represents a small portion of revenue compared with the hardware business.
(Reporting by Carol Zhong in Hong Kong and Greg Roumeliotis in New York; Additional reporting by Koh Gui Qing in New York; Editing by Stephen Coates)