Icahn Sells $40 Million of Xerox Stock, While Fujifilm CEO Sees Copier Opportunities in Emerging Markets

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Investor Carl Icahn

In the wake of Fujifilm’s proposed takeover of Xerox, and Xerox’s merger with Fuji Xerox, controversial activist investor Carl Icahn – who has been increasingly critical of Xerox leadership in the past several weeks – has sold approximately $40 million worth of Xerox stock, according to a document filed with the U.S. Securities and Exchange Commission.

Icahn sold some 1.6 million shares of Xerox, but according to Bloomberg News, he remains Xerox’s largest shareholder with 23.6 million shares.

Last week, Xerox and Fujifilm announced that Fujilfim would be acquiring a 50.1 percent controlling interest in Xerox for $6.1 billion, and that Xerox would be merged with Fuji Xerox, the latter of which is a joint venture between Xerox and Fujifilm. Fujifilm is spending its unrealized profit on its 75-percent stake in Fuji Xerox to acquire its controlling interest in Xerox. Current Xerox CEO Jeff Jacobson will be the CEO of the new combined Xerox-Fuji Xerox.

Meanwhile the Nikkei Asian Review interviewed Fujifilm CEO and Chairman Shigetaka Komori, who remarked: “I’m not worried about Carl Icahn. Xerox will be paying a special cash dividend. With his 10-percent stake, he will be receiving close to 30 billion yen. That will probably satisfy him. … I am happy to meet with Icahn.”

Fujifilm CEO and Chairman Shigetaka Komori

Under the deal, Xerox will pay Xerox shareholder $2.5 billion in cash dividends to current shareholders, which Komori thinks “will go a long way toward winning over Icahn,” who is Xerox’s largest shareholder, with a 9.7 percent stake.

Cost Savings

Fujifilm’s Komori also commented: “This deal is a game changer. … The combination will create synergies and produce cost savings worth $1.7 billion a year,” he said. “It will become much easier to increase market share. … No company is perfect. Its payroll becomes bloated over time. All organizations need a clean-up from time to time.”

Fujifilm will also be laying off some 10,000 employees at Fuji Xerox, about a fifth of its employees. Employees at Xerox will not be affected.

But Komori also says that the joint Xerox-Fuji Xerox will also be able to unify product development and marketing, and develop products much faster at lower costs and distribute them to markets around the world. Currently Xerox’s product distribution is restricted to Europe and North America, while Fuji Xerox’s product distribution is restricted to Asia-Pacific.

Komori also said that Fuji Xerox has been too reliant on the Xerox brand and “lacks sufficient cost consciousness.” But while demand for copiers may have slowed in developed Western markets, Komori says there will be continuing demand in emerging economies: “Demand for copiers won’t disappear soon. There will be demand from emerging economies, such as China and India as well. But this is not a market that will grow 5 percent a year. Only the strongest company will be able to survive.”

The deal – which must still be approved by U.S. regulators and Xerox stockholders – will create a copier/printer company on the scale of HP Inc., and will eclipse the size of copier rivals Canon and Ricoh.

The Fujifilm CEO expects the Xerox-Fuji Xerox integration to be completed in about three or four years. He also noted that taking control of Xerox had been a long-term goal: “Of the two things I wanted to do, one was taking control of Xerox… (the merger) is like hitting a 250-yard drive shot. You still have to put the ball on the green and then into the hole, hopefully with one putt.”

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