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Xerox to combine with Fuji Xerox

Feb 1, 2018
Originally published on February 1, 2018 1:44 pm

Xerox, the storied American company that has its roots in Rochester in the early 20th century, is getting a new owner.

Early Wednesday morning it was announced that Fujifilm Holdings, the company that Xerox has had a joint venture with for many years, will take a majority stake in the company. The new business will be called Fuji Xerox, and will be 50.1% owned by Fujifilm, while also keeping Xerox's listing on the NYSE.

The company statement says that the new Fuji Xerox will have dual headquarters in Norwalk, CT, U.S. and in Minato, Tokyo, Japan, with presence in over 180 countries. The combined company will go to market and maintain the “Xerox” and “Fuji Xerox” brands within its respective operating regions

Xerox's Chief Executive, Jeff Jacobson, is slated to be the CEO of the new company. Officials say the combined company expects to deliver $1.7 billion in annual cost savings by 2022, with $1.2 billion of that to be achieved by 2020.

The impact on jobs specifically is not known yet for the Rochester area, where 3,400 people work, many of them in Webster. Xerox just announced last week it will be moving its several hundred employees at Xerox Square downtown into the Webster campus later this year.

A Xerox spokesman says he can't speculate on any local impact as the deal is not expected to close until the second half of this year. He says until that time it is business as usual for both companies. 

Before the merger announcement, Fujifilm said it planned to cut 10,000 jobs at Fuji Xerox in order to stay competitive.

Shigetaka Komori, chairman and chief executive officer of Fujifilm, said, “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.”

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 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.”

When the deal is complete, Xerox shareholders will receive a $2.5 billion special cash dividend, or approximately $9.80 per share, and 49.9% of the combined company; Fujifilm to own 50.1%. 

Xerox had recent changes to their Board of Directors in a push by the company's largest shareholder Carl Ichan. In December, Jonanthan Christodoro stepped down from the board, dissatisfied with the board's direction for the company. Christodoro was appointed to the board by Carl Ichan, and will join a slate of three other Icahn-backed nominees to run for the Xerox board next year.

George Conboy is Chairman of Brighton Securities. He says that, "Xerox has been stunted in their growth for at least a decade now, as one set of managers after another first nearly wrecked the company, then the company was brought back to life by Anne Mulcahy, and then it’s drifted for the last 10 years."

As far as future Xerox employment locally is concerned, Conboy says that, "We certainly do manufacturing in the Rochester area for Xerox and hopefully when new management looks at the totality of their manufacturing picture, the Rochester area will have an important piece of that."  But he says there is still a lot of uncertainty.

Xerox stock closed up around 4.5 %  on Wednesday, rising $1.45 to $34.13 a share.

Here are the presentation slides from Xerox's Q4 earnings call:

This is the fact sheet the new Fuji Xerox company released: