$6.1 Billion Fuji Xerox Takeover Deal Announced
Speculation of a Fuji Xerox Takeover Deal Confirmed
The speculation has been confirmed. According to Reuters, Fujifilm has struck a $6.1 billion deal with Xerox to bring the U.S. company into their “existing joint venture to gain scale and cut costs.”
The combined company will take the name of the existing joint venture, Fuji Xerox, and will become a subsidiary of Fujifilm. Fuji Xerox will have dual headquarters in Norwalk, CT and Minato, Tokyo. The combined companies, however, will “maintain the ‘Fuji Xerox’ and ‘Xerox’ brands within its respective regions,” according to the Fujifilm press release.
The existing venture, Fuji Xerox, was founded in 1962 and provides business solutions for the Asia Pacific region, including Japan, China and the recently scandal-ridden Australia and New Zealand divisions. This 56-year relationship has built long-term cooperation and trust between the two companies that may explain the rapidity of this deal.
As it stands, Fujifilm owns “75% of Fuji Xerox,” according to Reuters, but “Fuji Xerox will buy back that stake from Fujifilm for around $6.1 billion, using bank debt. Fujifilm will use those proceeds to purchase 50.1% of new Xerox shares.” Fujifilm will also be restructuring the existing Fuji Xerox, cutting 10,000 jobs – more than a fifth of its workforce – in the Asia Pacific region.
In a press release, Xerox states that the expanded Fuji Xerox will deliver at least “$1.7 billion in total cost savings, with $1.2 billion to be achieved by 2020.” The release goes on to posit that the new Fuji Xerox will be “well-positioned to lead in growing business areas such as high-speed inkjet, industrial print and workplace solutions.”
Xerox shareholders will receive a $2.5 billion special cash dividend, or approximately $9.80 per share.” Despite this, some investors are certainly not going to be pleased. The rumored deal has been vociferously opposed by activist-investor Carl Icahn and Darwin Deason, citing their complete lack of confidence in Xerox leaderships’ ability to broker a deal to the company’s advantage. It has been speculated that this deal with Fujifilm is intended to protect Xerox from Icahn’s growing influence and shield the CEO and senior management whom Icahn has outright targeted in his recent open letters.
The deal does seem to have protected Xerox CEO Jeff Jacobson for the moment. Jacobson will continue to serve as CEO with Fujifilm CEO Shigetaka Komori serving as chairman. “This has been a speedy decision, but I believe it’s a creative one,” Komori stated in a press briefing. “The new structure will leverage the strengths of our three companies.”
Plans for the deal are expected to be completed around July-August of 2018.