Japan’s Fujifilm Holdings will take over Xerox Corp in a US$6.1 billion (A$7.6 billion) deal, combining the US company into their existing joint venture to gain scale and cut costs amid declining demand for office printing. This transaction has been unanimously approved by the Board of Directors of Fujifilm and Xerox on January 31st, and January 30th respectively, according to the Fujifilm website.
With a decreasing demand for office printing, Xerox has struggled to find new sources of growth. In addition, Fujifilm is also trying to streamline its copier business with a larger focus on document solutions services.
The two companies will combine by Fuji Xerox becoming a 100 per cent subsidiary of Xerox, and Xerox will change its name to “Fuji Xerox” (hereinafter “New Fuji Xerox”). Fujifilm will acquire 50.1 per cent of New Fuji Xerox, and the company will maintain its NYSE listing. The combined company will maintain the “Fuji Xerox” and “Xerox” brands within its respective operating regions.
Both companies hope that under a globally unified management strategy, the combined company will further accelerate its business growth and offer new value to customers. New Fuji Xerox will benefit not only from its size but also from its solid management resources, including strong brands, latest technologies and excellent human resources that support these brands, global marketing capabilities and excellent client base.
Moreover, by leveraging Fujifilm’s vast range of technologies, as well as its experience and knowhow in creating new businesses, New Fuji Xerox will be looking to accelerate its transformation, as a leading company not only in the office document business, which it has the No.1 position in, but also in commercial printing, centred around inkjet, as well as various types of industrial printing, and solution services that improve operational processes and productivity.
The combined company is expected to deliver a total of US$1.7 billion in total annual cost savings by 2022, with approximately US$1.2 billion of the total cost savings expected to be achieved by 2020. As part of this cost improvement initiatives, the existing Fuji Xerox will implement a fundamental structural reform, in order to improve earnings and productivity, and transform itself into a lean company.
According to reports from both companies, the new Fuji Xerox will accelerate value creation that lead to productivity improvements in the office-related business, by the combination with Fujifilm’s vast range of marking technologies from imaging to industrial applications, and utilisation of the company’s management expertise and experience in business transformation, and improve its earnings capability. Fujifilm will continue its investments in growth areas such as healthcare and highly functional materials, further accelerating the growth of the overall the Group.