Xerox abandons Fuji Xerox business

Xerox has sold its remaining 25 percent stake in the Fuji Xerox joint venture to a subsidiary of Fujifilm, while Fujifilm has also agreed to give up on its efforts to sue Xerox for $1 billion following the failed merger last year. The two have also modified and extended the existing sourcing terms for future products to ensure Xerox can still supply these.

The Fuji Xerox 11000 Inkjet press is a dual engine web-fed colour press that will print to offset coated stock.

In addition, Xerox has sold its 51 percent stake in Xerox International Partners (XIP) to an affiliate of Fuji Xerox. XIP is an OEM joint venture between the two companies. The terms grant it a new IP license that will allow Fuji Xerox to OEM various products, such as printer engines, to named parties that are existing customers of XIP on a worldwide basis in exchange for a fixed royalty. 

Xerox should realise some $2.3 billion from these arrangements, including accrued but unpaid dividends through the date of the closings. The company says that it will use this to finance mergers and acquisitions in other industries, as well as returning capital to shareholders and for paying down its $550 million December 2019 debt maturity. The deals, which were approved unanimously by the board of directors of both companies, are still subject to the usual regulatory procedures. 

John Visentin, vice chairman and CEO of Xerox, explained that these arrangements would reset the relationship with Fujifilm, adding: “These agreements also unlock significant unrealized value for our shareholders, provide greater clarity for our customers and help us speed our transformation to a digital-first company.”

Fuji Xerox, which was founded in 1962, will now operate as a wholly owned subsidiary of Fujifilm. Naturally, Fujifilm says that it will be able to make savings by cutting out duplicate functions such as procurement, optimisation and infrastructure. Obviously Fujifilm could make further savings by simply integrating Fuji Xerox directly but the company says that keeping it as a separate organisation will give it more flexibility. 

Shigetaka Komori, Chairman and Chief Executive Officer of Fujifilm, commented that this was a logical next step, adding: “Full ownership of Fuji Xerox will facilitate faster decision making in a rapidly changing business environment. At the same time, Fuji Xerox will be able to further strengthen its business by capturing new OEM opportunities in the global market, leveraging our world-leading product development and manufacturing capabilities. We are excited to start a new chapter for Fujifilm and Fuji Xerox.”

This neatly ties up the remaining thread from last year’s botched merger, which ultimately saw many of the Xerox board members replaced following interventions from two share holders, Carl Icahn and Darwin Deason. The arrangement sees Xerox extricating itself from the Fuji Xerox joint venture, which Icahn in particular had argued for. But Fujifilm also gains through the arrangements with XIP, which should give it better opportunities to supply products such as printer engines to customers worldwide, including the U.S. and Europe. Fujifilm also believes that it will be able to supply some of its other technology, such as medical diagnostic equipment, through this same sales route. 

You can find further details at Xerox.co.uk and fujifilmholdings.com.


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Comments

2 responses to “Xerox abandons Fuji Xerox business”

  1. Patrick Howard avatar
    Patrick Howard

    Interesting use of the verb abandon. Makes it seem as though they had other options or even better intentions.
    Xerox is being hollowed out by its private equity owners. It is no longer a manufacturer or R&D vehicle of significance. When Ichan, Deason et al have extracted every dollar from the once great company the last person to leave will have to turn off the lights.

    1. Nessan Cleary avatar
      Nessan Cleary

      Ha – Patrick, as always, it’s hard to disagree with your analysis. And with today’s news about the bid for HP, this is only going to get weirder.

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