This Week in Imaging: Fujifilm Better Off? Latest Xerox-Icahn News; Company Financials, More
Although Fujifilm of Japan clearly isn’t happy that Xerox has called off the merger deal, there’s a good case to be made – as laid out by this article in the Washington Post – that this may be a “lucky escape” for Fujifilm. The big advantage for Fujifilm with the deal would have been direct access to Xerox channels in North America and Europe, and there might have been significant cost savings. On the downside, Fujiflm would have laid off some 10,000 people; Fujifilm is still recovering from Fuji Xerox’s New Zealand’s accounting scandal, and the lay-offs wouldn’t have helped its public relations. Moreover, Fujiflm is also branching out of into new areas outside of printing and imaging, including healthcare and cosmetics, which are proving profitable.
Back in March, Stephen Givens, writing for the Nikkei Asian Review, also argued against the deal for Fujifilm, stating that the deal could “embroil the Japanese group in U.S.-style investor disputes” and that various conflicts could arise in combined Xerox-Fuji Xerox. Givens noted that, “unlike in Japan, in a U.S. court, the majority shareholder will carry the burden of proving that each transaction with the controlled entity (Xerox) is scrupulously fair and at arm’s length. U.S. companies therefore almost never create ownership structures that expose them to this kind of conflict of interest claim from minority public shareholders.” That suggests that the deal could have led to endless litigation instigated by activist investors for Fujiflm.
Fujifilm seems yet to realize these advantages, however. It’s threatening legal action, contending that Xerox didn’t have the right to terminate the deal.
As for Xerox, this week our feature story takes a look at what may be in store. Essentially, that comes down to three options: sell to a private-equity firm (Carl Icahn has stated that he’s been approached by a number of financial sponsors), sell to a competitor (HP Inc. is said to have been interested), or implement Icahn’s lengthy proposal to “revitalize” Xerox. In our feature story, we take a long look at the probability and merits of all of these options.
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