Fujifilm to take over Xerox in $6.1 bn deal, create JV

NEW YORK: Japan’s Fujifilm Holdings is set to take over Xerox Corp in a $6.1 billion deal, combining the US company into their existing joint venture to gain scale and cut costs amid declining demand for office printing.
The acquisition announced on Wednesday 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. Fujifilm is also trying to streamline its copier business with a larger focus on document solutions services. Consolidation of R&D, procurement and other operations would enable Fuji Xerox to deliver at least $1.7 billion in total cost savings by 2022, the two companies said.
Fujifilm now owns 75 per cent of Fuji Xerox, the joint venture going back more than 50 years ago which sells photocopying products and services in the Asia-Pacific region.
The two companies said that Fuji Xerox will buy back that stake from Fujifilm for around $6.1 billion, using bank debt. Fujifilm will use those proceeds to purchase 50.1 per cent of new Xerox shares. Plans were for the deal to be completed around July-August, they added. —
The combined company 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 joint venture accounts for nearly half of Fujifilm’s sales and operating profit.
Both companies have struggled with slow sales of photocopy products, as businesses increasingly go paperless. Fujifilm on Wednesday reported a 29.4 per cent drop in operating profit at its document solutions operations, which includes Fuji Xerox, for the third quarter, under-performing its imaging and information segments. Overall, the company reported a 3.4 per cent increase in operating profit for the quarter.
Xerox reported a net loss from continuing operations of $196 million in the fourth quarter, mainly due to a one-off $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,” Fujifilm CEO Komori told reporters at a briefing. — Reuters