Xerox will pay cash and stock to acquire IT and business process outsourcer Affiliated Computer Services.

Imaging giant Xerox (NYSE: XRX) said Monday it has reached an agreement to acquire tech and business services firm Affiliated Computer Services for $6.4 billion. The deal follows by one week Dell (Dell)'s disclosure that it intends to buyout ACS rival Perot Systems.

Xerox will pay cash and stock to acquire ACS's outstanding shares for $63.11 per share, a healthy premium over Friday's closing price of $47.25.

ACS shares were up more than 20%, to $57.05, in pre-market trading Monday on word of the pact. Xerox shares slumped more than 10% in the premarket as investors voiced concerns about the deal's terms—including the fact that Xerox will assume ACS's $2 billion debt load--and integration issues.

ACS is expected to post about $7 billion in revenue in the current fiscal year on earnings of about $4.18 per share.

Xerox officials called the agreement a "game changing" move that will see their company marry its imaging hardware with ACS's business services, which include handling forms processing for numerous state, federal, and healthcare organizations.

"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," said Xerox CEO Ursula Burns, in a statement. "A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth," said Burns.

Xerox said the acquisition would contribute positively to earnings in its first year.

ACS officials said the buyout would help ACS extend its operations worldwide. "For ACS to expand globally and differentiate our offerings through technology, we need a partner with tremendous brand strength and leading innovation," said ACS CEO Lynn Blodgett, in a statement.

"Xerox offers that and more to bring our business to the next level while strengthening theirs," said Blodgett, who will report to Burns under a new management structure.

The plan, subject to regulatory and shareholder approval, calls for ACS stockowners to receive $18.60 per share in cash plus 4.935 Xerox shares for each ACS shares they own.

Xerox's plan to buyout ACS is the latest sign of consolidation in the highly competitive IT and business services market. Dell last week announced a deal to acquire Perot Systems for $3.9 billion, while Hewlett-Packard snapped up Electronic Data Systems for $13.9 billion last year.

The deals leave Los Angeles-based Computer Sciences (NYSE: CSC) Corp. as the nation's remaining, independent major outsourcing vendor.Source informationweek