Agree to combine Fuji Xerox joint venture with Xerox with Fujifilm owning 50.1% share.
FUJIFILM Holdings Corporation and Xerox Corporation have entered into a definitive agreement to combine Xerox and their longstanding Fuji Xerox joint venture. Fujifilm will own 50.1% stake of the combined company. This transaction has been unanimously approved by the Board of Directors of Fujifilm and Xerox on January 31st, and January 30th respectively.
This transaction has been unanimously approved by the Board of Directors of Fujifilm and Xerox on January 31st, and January 30th respectively. The two companies will combine by Fuji Xerox becoming a 100% subsidiary of Xerox, and Xerox will change its name to Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or approximately $9.80 per share.
Struggling with falling demand for copiers and printers, Xerox has agreed to merge its operations with Fuji Xerox, the joint venture that has been in business since 1962. Fuji Xerox is a leading Document Solution Company, and is currently a 75-25 joint venture between Fujifilm and Xerox.
Fujifilm will acquire 50.1% of New Fuji Xerox, and the company will maintain its NYSE listing. The combined company will maintain the “Fuji Xerox” and “Xerox” brands within its respective operating regions.
The combined company is expected to deliver a total of USD $1.7 billion in total annual cost savings by 2022, with approximately $1.2 billion of the total cost savings expected to be achieved by 2020. As part of this cost improvement initiatives, the existing Fuji Xerox will implement a fundamental structural reform, in order to improve earnings and productivity, and transform itself into a lean company.
The new Fuji Xerox’s Board of Directors will include twelve members, seven of whom will be appointed by the Fujifilm Board. Five independent directors will be appointed from the Xerox Board. Shigetaka Komori, chairman and chief operating officer of Fujifilm and Chairman of the existing Fuji Xerox, is going to serve as chairman of the Board. Jeff Jacobson will serve as the CEO of the new Fuji Xerox entity.
Mr. Komori added, “I am confident that Fujifilm’s ability to drive change as well as its experience of successful reinvention will give a competitive edge to the new Fuji Xerox, delivering significant value creation to shareholders of both the new Fuji Xerox and Fujifilm. 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.”
Jeff Jacobson, chief executive officer of Xerox, said, “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. 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. 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.”
Robert J. Keegan, chairman of Xerox’s Board of Directors, said, “Today’s announcement follows a comprehensive review of our strategic and financial alternatives led by Xerox’s independent directors that began after the separation of Conduent in 2016. Upon careful consideration of all alternatives available to the company, the Board of Directors concluded that this combination is clearly the best path to create value for our shareholders. An attractive, certain cash dividend, together with participation in the future success of the combined company, presents a compelling value equation for Xerox shareholders. We are excited to strengthen our longstanding relationship with Fujifilm as we enter the next phase of Xerox’s transformation journey.”
Fujifilm has indicated it plans to lay off 10,000 Fuji Xerox workers. The job cuts are part of a wider restructuring that the company is undertaking in the face of increased competition and it expects to reduce annual costs by 50 billion yen ($460 million) in the process.
