Xerox’s days of independence have come to an end after the firm revealed that it will be combined into an existing copier joint venture it already has with Japan’s Fujifilm.
It comes after Xerox formally split into two separate businesses (hardware – Document Technology) and IT services (business process outsourcing) back in 2016. The firm denied reports at the time that activist inventor Carl Icahn was behind that move.
But there is little doubt that Norwalk, Connecticut-based Xerox had been under pressure to find new growth opportunities amid shrinking demand for its printer and photocopier business.
Fujifilm and Xerox created this copier joint venture in 1962, meaning Fujifilm was free to focus on the Asia Pacific region including Japan and China, whereas Xerox was able to cover the rest of the world.
This joint venture currently accounts for nearly half of Fujifilm’s sales and operating profit.
And it is clear who is in the driving seat, as Xerox has a market value of about $7.7 billion, while Fujifilm is valued at around $22 billion.
“The combined company will be a global leader in innovative print technologies and intelligent work solutions with annual revenues of $18 billion and leadership positions in key geographic regions,” said the two firms.
Meanwhile Xerox shareholders (including Carl Icahn) will receive a $2.5 billion special cash dividend, or approximately $9.80 per share.
The Xerox shareholders will own 49.9 percent of the combined company, and Fujifilm will own 50.1 percent of the combined company.
The transaction has been unanimously approved by the both boards of directors and the combined company will be named “Fuji Xerox” and trade on the NYSE under the ticker XRX. The new Fuji Xerox will have dual headquarters in Norwalk, CT, and in Minato, Tokyo.
“Fujifilm and Xerox have fostered an exceptional partnership through our existing Fuji Xerox joint venture, and this transaction is a strategic evolution of our alliance,” said Shigetaka Komori, chairman and chief executive officer of Fujifilm. “The Document Solutions business represents a significant part of Fujifilm’s portfolio, and the creation of the new Fuji Xerox allows us to more directly establish a leadership position in a fast-changing market.”
“We believe Fujifilm’s track record of advancing technology in innovative imaging and information solutions – especially in inkjet, imaging, and AI areas – will be important components of the success of the new Fuji Xerox. We are delighted to welcome Xerox and its employees to the Fujifilm family and look forward to combining our strengths towards jointly shaping the future of our industry.”
“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,” added Jeff Jacobson, CEO of Xerox.
Upon close of the transaction, Jacobson will serve as CEO of the new Fuji Xerox.
“The new Fuji Xerox will be better positioned to compete in today’s environment with truly global scale, increased presence in fast-growing markets, and innovation capabilities to effectively meet our customers’ rapidly-evolving demands,” said Jacobson. “In addition, the combined company’s strong financial profile will enable investments that support continued market leadership, while also providing opportunities for increasing capital returns over time.”
Formed in 1906, Xerox is a long-standing tech icon in the IT industry and to some is perhaps best known as the pioneer of photocopiers.
But Xerox was responsible for more than that. Years ago its researchers at Xerox’s Palo Alto Research Center were responsible for developing many technologies that are still in use today, including Ethernet and the graphical user interface.
Xerox sold its Information Technology Outsourcing (ITO) business to Atos back in December 2014 for £670m.
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