Fujifilm Buying Control of Xerox to Form $18 Billion Company


Fujifilm Holdings Corp. is buying control of Xerox Corp. in a deal that creates an $18 billion company and marks the end of the independence of the iconic American corporate giant.

Xerox, which has a market value of $8.3 billion, will first merge with a joint venture the company operates with Fujifilm in Asia, according to a statement Wednesday. Current Xerox shareholders will receive a cash dividend of $9.80 per share. In a complex transaction, Tokyo-based Fujifilm will ultimately end up owning 50.1 percent of the combined entity, which expands the joint venture to encompass all of Xerox’s operations.

The deal will make for a more global company, according to Simon Chan, an analyst at Bloomberg Intelligence. “In the past, Fuji Xerox only operated in the Asia-Pacific region, and Xerox targets the Americas and Europe,” Chan said. “With the combined company, they can share cost on research, product development and potentially manufacturing capacity as well.”

Sales Drag

Fuji Xerox revenue has been hit as demand wanes for its printer-centric business

Source: Bloomberg data, company documents

The deal marks the end of independence for a U.S. company whose roots trace back to the start of the 20th century. While Xerox became famous for its hardware, it has fallen on hard times as Canon Inc. and Asian competitors eroded its dominance while email and other forms of electronic communications took over. The new company will accelerate revenue growth through its global reach and pursue developments in inkjet, imaging and artificial intelligence, it said.

The joint venture will cut 10,000 jobs in Asia as part of the restructuring as the Japanese company struggles with an “increasingly severe” market environment, Fujifilm said Wednesday.

The new combined company, Fuji Xerox, will trade on the New York Stock Exchange and have dual headquarters in Norwalk, Connecticut, and Tokyo. Jeff Jacobson, chief executive officer of Xerox who has come under criticism from activist investor Carl Icahn, will become CEO of the combined company.

“The proposed combination has compelling industrial logic and will unlock significant growth and productivity opportunities for the combined company, while delivering substantial value to Xerox shareholders,” Jacobson said in the statement.

Xerox and Fujifilm’s 55-year-old joint venture in Asia is the subject of a recent accounting probe into its practices in New Zealand and Australia, which prompted Icahn to call for renegotiating or scrapping the agreement. Icahn this month teamed up with fellow Xerox investor Darwin Deason to urge the company to explore strategic alternatives and shake up its joint venture with Fujifilm. The pair — Xerox’s first- and third-largest shareholders, respectively — called for Xerox to immediately replace Jacobson.

Fujifilm executives said in a press conference Wednesday in Tokyo they were confident all shareholders will approve the deal.

Fujifilm Holdings, which lowered its forecast for operating income for the year ending March 31, will cut one-fifth of its global workforce at the joint venture. The company said it will incur a one-time expense of 72 billion yen ($662 million) over three years.

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