Fuji Xerox Will Continue to Supply Xerox, But Also Other OEMs
Fujifilm of Japan today reported that its board of directors has approved a definitive agreement with Xerox to purchase Xerox’s 25-percent stake in Fuji Xerox for $2.3 billion, bringing Fujifilm’s ownership of Fuji Xerox to 100 percent.
Fuji Xerox will operate as a wholly owned subsidiary of Fujifilm and will continue to supply to Xerox after completion of the transaction.
Fujifilm Chairman and CEO Shigetaka Komori commented: “This transaction is an ideal next step for Fuji Xerox and Fujifilm that we believe serves our stakeholders well and reflects our commitment to create innovative products that contribute to society.
“Fuji Xerox has now become a lean and strong company after a series of reforms we started in 2018, and I am confident that with this initiative it will be even stronger.”
Komori added, “(Fujifilm’s) Full ownership of Fuji Xerox will facilitate faster decision making in a rapidly changing business environment. At the same time, Fuji Xerox will be able to further strengthen its business by capturing new OEM opportunities in the global market, leveraging our world-leading product development and manufacturing capabilities. We are excited to start a new chapter for Fujifilm and Fuji Xerox.”
As part of the transaction, Fujifilm has agreed to withdraw litigation it filed against Xerox on June 18th, 2018 claiming damages caused by the unilateral cancellation of the definitive agreement between the two companies.
Founded in 1962, Fuji Xerox has provided office related products and solutions to increase productivity and has grown into a company with revenues exceeding 1 trillion yen. It is also known as one of the most successful cross-border joint ventures between Japanese (Fujifilm) and non-Japanese companies (Xerox).
Fuji Xerox operates in the Asia-Pacific market and is said to have a strong customer base for large corporations and government offices.
Strengthening Document Solutions Business
While it will continue to supply its products to Xerox under an existing agreement, Fuji Xerox says it will also strengthen its Document Solutions business in several ways.
Most importantly, Fujifilm says Fuji Xerox will have expanded OEM opportunities and supply products such as printer engines to customers worldwide, including those in the United States and Europe.
Fujifilm says the acquisition will also enable it to capitalize on new product opportunities. For instance, Fuji Xerox’s language processing technology together with Fujifilm’s image processing technology can be utilized to develop automatically generated diagnostic reports in the medical segment.
In the printing industry, Fujifilm and Fuji Xerox will be better positioned to facilitate digitalization, offering one-stop solutions from analog to digital. Fujifilm will combine its graphic-printing systems business, which possesses extensive client base in commercial and package printing, with Fuji Xerox’s sales, technological, and product creation capabilities.
With full ownership of Fuji Xerox, Fujifilm says it will realize cost synergies from integration of duplicate functions, procurement optimization, and infrastructure sharing within the Fujifilm Group.
Expected Financial Benefits
- Fujifilm expects overall revenue in the Fuji Xerox Document business of ¥1.3 trillion by fiscal-year 2024.
- Fuji Xerox expects to stabilize mid-to-long-term Document Solutions revenue by diversifying revenue sources, expanding OEM business globally, and further expanding into adjacent areas. Fuji Xerox expects ¥150 billion in revenues by fiscal-year 2024.
- Fujifilm expects a total of ¥10 billion in cost savings by fiscal-year 2024 with Fuji Xerox as a wholly owned subsidiary. The cost-saving measures include integration of duplicate middle/back-office functions, consolidation of overseas operations, and procurement optimization.
Fujifilm says the acquisition aligns with one of the basic strategies outlined in its mid-term management plan VISION2019 ― “Strengthening Document Business. The transaction will also allow Fujifilm to use the cash generated to invest in growth areas including healthcare and highly functional materials.
- November 2019: In Big Shakeup, Xerox to Exit Fuji Xerox Partnership
- October 2019: Fujifilm CEO Still Wants Xerox, But Will HP Beat Him to the Punch?
- June 2019: Fujifilm Not Worried About Expanded Xerox-HP Relationship
- October 2018: Court Overturns Injunctions That Blocked Proposed Fujifilm-Xerox Deal
- June 2018: Fujifilm: Xerox Plan to Sell Directly in Asia-Pacific Will be “Extremely Difficult”