After collaborating as corporate partners for more than half a century, Fujifilm and Xerox are embarking on a closer union amid the challenges of a declining market for their legacy printer businesses.
Under a deal announced Tuesday, Xerox will shed its independence, with Fuji Xerox buying back Fujifilm’s 75% stake in the joint venture for about $6.1 billion and the Japanese company using the proceeds to acquire 50.1% of Xerox.
Xerox shareholders would receive a special cash dividend of $2.5 billion, or approximately $9.80 per share, representing more than 30% of the undisturbed closing price as of Jan. 10. The stock rose 4.4% to $34.13 in trading Tuesday.
The companies said the new Fuji Xerox will deliver at least $1.7 billion in total cost savings, with $1.2 billion to be achieved by 2020, and have annual revenues of $18 billion.
“The new Fuji Xerox will be better positioned to compete in today’s environment with truly global scale, increased presence in fast-growing markets, and innovation capabilities to effectively meet our customers’ rapidly-evolving demands,” Xerox CEO Jeff Jacobson said in a news release.
For Xerox, as The New York Times reports, the deal signals the “end of a company that was once an American corporate powerhouse.”
Its high-end Xerox machines, the Times said, became symbols of modern technology and its corporate name became a verb. But it has faced stiff competition from lower-cost Japanese competitors like Canon and Ricoh and “struggled with the rise of email and the move by offices around the world to send and share documents electronically.”
While Xerox has diversified into business services, such efforts have not generated enough profit to make up for the declining copier business.
Fujifilm, meanwhile, has, according to Reuters, been “trying to streamline its copier business with a larger focus on document solutions services.” But operating profit in its document solutions segment, which includes Fuji Xerox, declined 29.4% for the most recent quarter.
“The creation of the new Fuji Xerox allows us to more directly establish a leadership position in a fast-changing market,” Fujifilm CEO Shigetaka Komori said.