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Xerox exits Fujifilm venture by selling stake to Japan partner for $2.3 bn

Fujifilm, which overhauled Fuji Xerox after the Xerox deal stalled, said it aims to expand the document printer business by 30% to 1.3 trillion yen (£9.3 billion) in the year ending in March 2025.

Makiko Yamazaki  |  TOKYO 

Fujifilm,Xerox Corp , acquisition, Fuji Xerox ,Jeff Jacobson,US tax law ,Komori, job cuts ,office printing
A man is silhouetted in front of Fujifilm Holdings' logo ahead of its news conference in Tokyo, Japan Photo: Reuters

Holdings Corp will sell its 25% stake in Fuji Xerox, its joint venture with Fujifilm Holdings, for $2.3 billion (£1.8 billion), after investor activism scuppered a deal involving the two

Xerox, struggling with falling demand for office printing equipment, had agreed to a complex $6 billion deal that would have merged the U.S. brand into Fuji and given Fujifilm control.

But scrapped the deal last year after lobbying by two of its main investors, Carl Icahn and Darwin Deason. It settled with them, handing control of the company to a new management, leading Fujifilm to sue for damages.

The legal battle created uncertainty for the two firms that were seen as inextricably intertwined through the 57-year-old venture. The JV accounted for nearly half of Fujifilm's revenue while Xerox no longer builds its own office copiers, instead relying mostly on Fuji Xerox.

"We expect the share acquisition to deepen integration between Fujifilm and Fuji Xerox and improve efficiency; expected maintenance of a cross-licensing agreement means any material impact on Fuji Xerox's business is unlikely," ratings agency S&P Global said in a statement.

As part of the new deal, Xerox will continue procuring copiers from Fuji Xerox, which will operate as a wholly owned subsidiary of Fujifilm.

Xerox will also sell its stake in another smaller JV with Fuji Xerox to Fujifilm, which will withdraw its lawsuit, the said in statements.

Xerox said it plans to use the proceeds to pursue acquisitions, adding that it also plans to return money to shareholders and pay down $550 million debt due in December.

After the deal with Fujifilm collapsed, Xerox took initiatives to streamline itself, opting for a holding-company structure that would allow it to lower its tax bill, protect patents and diversify.

For Fujifilm, taking full control of the JV allows more flexibility, combining its artificial intelligence, medical and other businesses with the venture's document business, Fujifilm Chief Executive Shigetaka Komori told Reuters.

Fujifilm, which overhauled Fuji Xerox after the Xerox deal stalled, said it aims to expand the document printer business by 30% to 1.3 trillion yen (£9.3 billion) in the year ending in March 2025.

"Fuji Xerox was a solid business and we made it stronger," Komori told a media briefing.

"We can now expand our sales territory...and launch new products," because Fuji Xerox will now be able to sell copiers not just to Xerox, but also to other brands in the United States and Europe, he said.

First Published: Tue, November 05 2019. 15:19 IST
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