Under Pressure from Icahn and Seeking New Growth, Xerox May be Negotiating Deal with Fujifilm

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Reuters reports that  Xerox is in talks for a deal with Japanese camera maker Fujifilm Holdings of Japan that could include a change in control of Xerox, according to a report from The Wall Street Journal.

Xerox has recently been under pressure from gadfly billionaire investor Carl Icahn, who owns a 9.7-percent stake in Xerox, and who has said that Xerox “desperately needs new leadership.” According to Reuters, Fujifilm is trying to streamline its copier business with a larger focus on document-solutions services.

Xerox and Fujifilm already have a Tokyo-based joint copier/MFP venture – Fuji Xerox – that focuses on the Asia-Pacific region, including Japan and China, while Xerox covers the rest of the world. The joint copier venture, Fuji Xerox, was created in 1962, and now accounts for nearly half of Fujifilm’s sales and operating profit.

According to Reuters: “The Journal report on Wednesday cited people familiar with the matter. It also said a full takeover of Xerox is not on the table, citing one of the people.”

Neither Xerox nor Fujifilm commented on the matter.

Xerox has a market value of about $7.7 billion, while Fujifilm is valued at around $22 billion. Fujifilm has been seeking growth outside its shrinking photographic film business, and stepping up its acquisition drive in areas such as regenerative medicine.

In October 2017, Icahn wrote a withering letter to Xerox shareholders, stating, among other things, that “Xerox desperately needs new leadership.” Icahn also compared Xerox to Eastman Kodak – the latter of which filed for Chapter 11 bankruptcy protection in 2012 – stating: “Yesterday, Xerox released a statement that paints a rosy picture of what is in reality a bleak situation that I fear could turn out like that of Eastman Kodak, where Xerox Chairman Bob Keegan worked for over 25 years and Xerox CEO Jeff Jacobson also served as a senior executive.”

Icahn contests Xerox’s allegedly “outrageous claim” that “shareholders have recognized Xerox’s progress, which is why the stock is up 30% year-to-date.”

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