Xerox and Fujifilm dispute ends in split

By Jo Francis, Tuesday 05 November 2019

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Xerox and Fujifilm have resolved the major fall-out that began last year and will end their near-60-year-old joint venture, in a deal that has significant ramifications for both companies.

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Fuji Xerox: Fujifilm to take sole control after 57 years of JV

Fujifilm is to acquire Xerox’s 25% stake in Fuji Xerox for $2.3bn (£1.8bn), and will also halt the $1bn lawsuit it launched after its proposed takeover of Xerox was stymied by two activist investors, resulting in a wholesale shake-up of the leadership at the US corporation.

The terms of the deal also include the sale of Xerox’s 51% stake in OEM joint venture Xerox International Partners, which operates in the US and Europe, to Fujifilm.

Fuji Xerox was set up in 1962. Its production printers for commercial printing include the Versant and Iridesse devices that are sold by Xerox in territories other than the Asia-Pacific region.

Fujifilm said the deal marked the beginning of “a new collaborative partnership” and it would continue to supply products to Xerox "in the mid- to long-term".

Fujifilm also said that its Graphic Systems & Inkjet business would "work more closely to enhance synergies in the graphics/inkjet/printing area" with Fuji Xerox, although the structures will not be merged and Fuji Xerox will remain as a separate entity. 

“Value creation and synergy opportunities will be enhanced by combining Fujifilm's graphic systems business which possesses extensive client base in commercial and package printing, with Fuji Xerox’s sales, technological, and product creation capabilities,” the firm stated.

It expects to achieve cost synergies of ¥10bn (£71.2m) by 2024. Fuji Xerox has sales of around $10bn and employs 40,000 staff around the world. Fujifilm also said that Fuji Xerox would continue as a wholly owned subsidiary of Fujifilm.

In Fujifilm’s most recent full year results the ¥236.7bn turnover Graphic Systems & Inkjet business became part of the ¥1,039bn Healthcare & Material Solutions division, Fujifilm’s biggest business unit.

Both Fujifilm and Xerox will be free to pursue new OEM opportunities without the previous strictures around their joint venture.

Over the summer Xerox had already inked a new partnership deal with HP for A4 and A3 printers, and software services.

Xerox chief executive John Visentin said the agreement would “reset” Xerox’s relationship with Fujifilm, and would “provide both companies with tremendous opportunities to grow, together and independently”.

“These agreements also unlock significant unrealised value for our shareholders, provide greater clarity for our customers and help us speed our transformation to a digital-first company,” he said.

Xerox will use the proceeds to pursue acquisitions in “core and adjacent industries”, to pay down $550m of debt due in December, and to return capital to shareholders.

Last week he raised the group’s earnings and cashflow guidance for the year alongside its Q3 results.

Fujifilm said it would use the cash generated to invest in “growth areas including healthcare and highly functional materials”.

Fujifilm chairman and chief executive Shigetaka Komori said: “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.”

The deal is subject to legal formalities and is expected to complete later this month.

Fujifilm’s share price went up by 6.74% following the news, while Xerox’s share rose by 3.55% yesterday and a further 3.84% in pre-market trading.

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