Fujifilm has purchased a majority stake in Xerox for US$6.1bn to create an US$18bn mega business, with New Fuji Xerox as it will be called now 50.1 per cent owned by Fujifilm.
The company says it is chasing a potential addressable market approaching US$120bn. They say New Fuji Xerox will jump ahead of Canon and Ricoh in printing revenues, and will be close to HP in terms of scale.
At the same time, Fuji Xerox says it will cut 10,000 jobs, mostly in the APAC region, from its already existing venture to cope with a decline in its photocopying business. This equates to one-fifth of its global workforce.
Fujifilm already owns 75 per cent of Fuji Xerox in a deal stretching back to 1962, the business operating in the Japan/Asia-Pacific region. The New Fuji Xerox will cover the rest of the world including the US and Europe.
The combined company will then be considered a subsidiary of Fujifilm, with dual headquarters in the United States and Japan, and listed in New York. It will be led by current Xerox CEO Jeff Jacobson, with Fujifilm CEO Shigetaka Komori serving as chairman.
The deal comes a week after two of the biggest three shareholders at Xerox called for the board, including Jacobson to be sacked, saying the company has lost its way. In the A3 printer market Xerox is now behind Konica Minolta. Jacobson says that combining the two businesses, "Has compelling industrial logic and will unlock significant growth and productivity opportunities for the combined company, while delivering substantial value to Xerox shareholders".
Shareholders in Xerox will receive a $2.5bn cash dividend as a result of the deal and will have a 49.9 per cent stake in the new entity.
New Fuji Xerox will have revenues of US$18bn, and is expected to deliver at least $1.7bn in total annual cost savings by 2022, with approximately $1.2bn of the total cost savings expected to be achieved by 2020.
Fuji Xerox says, “The targeted cost savings represent 10 per cent of the total cost base of the New Fuji Xerox, and will drive significant margin expansion over the next four years.
“Of the US$1.7bn cost savings, $1.25bn is related to the synergies that will be achieved through the transaction. In addition, the combined company will benefit from a cost reduction program commencing immediately at the existing Fuji Xerox joint venture, which is targeted to generate approximately $450m of cost savings on an annualized basis. These amounts are incremental to Xerox’s ongoing Strategic Transformation initiatives. The new company expects to incur approximately $1.4bn in one-time integration and restructuring costs, mainly in the first three years.”
Shigetaka Komori, chairman, Fuji Xerox says, “The merger will enable Fujifilm to formulate a consistent global and management strategy. 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.
“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.”
For printers purchasing hardware, the branding will not change, with the Fuji Xerox name to be maintained in the Asia Pacific, and Xerox in the US.
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