Fujifilm – USD 6 billion deal for Xerox
JAPAN • Fujifilm Holdings takes over Xerox Corp for an amount of USD 6.1 billion deal. 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. Xerox will be integrated into their existing joint venture.
This was reported by Reuters at the end of January 2018. Fujifilm now owns 75% of Fuji Xerox, the joint venture going back more than 50 years ago which sells photocopying products and services in the Asia-Pacific region. Consolidation of R&D, procurement and other operations would enable Fuji Xerox to deliver at least USD 1.7 billion in total cost savings by 2022, the two companies said.
As part of its own restructuring, Fujifilm said it was cutting 10,000 jobs at Fuji Xerox, more than a fifth of its workforce at the joint venture, in the Asia Pacific region.
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.
The two companies said that Fuji Xerox will buy back that stake from Fujifilm for around USD 6.1 billion, using bank debt. Fujifilm will use those proceeds to purchase 50.1% of new Xerox shares. It is planned that the deal will be completed around July-August 2018.
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% drop in operating profit at its document solutions operations, which includes Fuji Xerox, for the third quarter, underperforming its imaging and information segments. Overall, the company reported a 3.4% increase in operating profit for the quarter.
Xerox reported a net loss from continuing operations of USD 196 million in the fourth quarter, mainly due to a one-off USD 400 million charge as it sought to take advantage of changes to U.S. tax law but also reflecting the steady decline in office printing.
Editorial comment by NarrowWebTech: Since the announcement this deal is moving the whole printing industry, not only because of the cutting of 10,000 jobs at Fuji Xerox. It shows how also known manufacturers, being in the industry for many years, is struggling with the changing package market. Also the immense amount of cost savings dure to consolidation of reseach&development, procurement and more is remarkable. It will be more than interesting how this deal will have impact to the label and package printing industry and if Fujifilm Xerox is able to stay competitive in such a changing and demanding market.