20 July 2019
Fujifilm CEO Shigetaka Komori speaks at a news conference in Tokyo on Wednesday to announce a merger deal with Xerox Corp. Photo: Reuters
Fujifilm CEO Shigetaka Komori speaks at a news conference in Tokyo on Wednesday to announce a merger deal with Xerox Corp. Photo: Reuters

Fujifilm to take over Xerox in US$6.1 bln deal

Japan’s Fujifilm Holdings is set to take over Xerox Corp in a US$6.1 billion deal, combining the US company into their existing joint venture to gain scale and cut costs, Reuters reports.

Consolidation of R&D, procurement and other operations will enable Fuji Xerox to deliver at least US$1.7 billion in total cost savings by 2022, the companies were quoted as saying Wednesday.

Fujifilm now owns 75 percent of Fuji Xerox, a joint venture — which sells photocopying products and services in the Asia-Pacific region — that goes back more than 50 years. 

According to the Wednesday announcement, Fuji Xerox will buy back that stake from Fujifilm for around US$6.1 billion, using bank debt. Fujifilm will use those proceeds to purchase 50.1 percent of new Xerox shares.

The transaction is planned to be completed around July-August.

The combined entity will keep the Fuji Xerox name and become a subsidiary of Fujifilm, with dual headquarters in the United States and Japan, and listed in New York.

It will be led by Xerox CEO Jeff Jacobson, while Fujifilm CEO Shigetaka Komori will serve as chairman.

The deal comes as Xerox has been under pressure to find new sources of growth as it struggles to reinvent its legacy business amid waning demand for office printing, Reuters noted.

Fujifilm, meanwhile, has also been trying to streamline its copier business with a larger focus on document solutions services.

Fujifilm on Wednesday reported a 29.4 percent drop in operating profit at its document solutions operations, which includes Fuji Xerox, for the third quarter, underperforming its imaging and information segments. 

Xerox reported a net loss from continuing operations of US$196 million in the fourth quarter, mainly due to a one-off US$400 million charge as it sought to take advantage of changes to US tax law but also reflecting the steady decline in office printing.

“This has been a speedy decision, but I believe it’s a creative one,” Reuters quoted Fujifilm CEO Komori as saying at a media briefing. “The new structure will leverage the strengths of our three companies.”

As part of its own restructuring, Fujifilm said it is cutting 10,000 jobs at Fuji Xerox, more than a fifth of its workforce at the joint venture, in the Asia Pacific region.

Xerox has been targeted by activist investor Carl Icahn and shareholder Darwin Deason, who joined forces last week to push Xerox to explore strategic options, oust its “old guard”, including its CEO, and negotiate better terms for its decades-long deal with Fujifilm.

Icahn is Xerox’s biggest shareholder, with a 9.72 percent stake, according to the Reuters report.

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