It's the second giant purchase of a local outsourcing company in the last week after Dell Inc. said last Monday it will buy Plano, Texas,-based Perot Systems Corp. for $3.9 billion.

And if the deal goes through, it would mean the acquisition of all three of the major local outsourcing companies in barely the space of a year: ACS, Perot and, last year, Plano-based Electronic Data Systems Corp.

ACS is a bit of a different outfit than Perot or EDS, though, focusing more on business process outsourcing rather than information technology outsourcing.

In other words, ACS specializes in helping companies manage their back-office functions, such as human resources, as much as it does in running computer systems.

And executives at ACS and Connecticut-based Xerox said their merger will strengthen ACS' position in that market.

"By combining Xerox's strengths in document technology with ACS's expertise in managing and automating work processes, we're creating a new class of solution provider," Xerox chief executive officer Ursula Burns said in a statement. "A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth."

Under the terms of the deal, ACS shareholders will receive a total of $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own. Xerox will also assume ACS's debt of $2 billion and issue $300 million of convertible preferred stock to ACS's Class B shareholder.

"We're proud of our significant profitable growth over the past 20 years and our ability to manage our clients' operations with a global infrastructure and workforce," Lynn Blodgett, president and chief executive officer of ACS, said in the news release.

"We also know that for ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation. Xerox offers that and more to bring our business to the next level while strengthening theirs."

The companies said they expect to reduce costs by $300 million to $400 million in the first three years, but did not immediately comment on the possibility of layoffs.

Xerox said the deal is expected to close in the first quarter of 2010, and that ACS will operate as a separate division under the new name of ACS, a Xerox Company and remain under the leadership of Blodgett.

When Hewlett-Packard Co. bought EDS, it initially renamed the division "EDS, an HP company", but last week changed the name to HP Enterprise Services, retiring the EDS brand.

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