Xerox Enters into Joint Venture Under Fujifilm Board

Fujifilm has acquired Xerox for $6.1 billion. Xerox will be merged with the existing Fuji Xerox joint venture and Fujifilm will acquire a majority stake in the new construction. There will be at least 10,000 layoffs at the joint venture.

The layoffs, which will take place around 2020, are related to the closing of certain joint factories in Asia. According to Fujifilm, this round of layoffs is necessary due to the “increasingly difficult” market conditions, Bloomberg reports. The acquisition is likely to be completed in the summer.

Fujifilm says the acquisition will make it a world leader in the printer market and achieve annual sales of $18 billion. According to the Japanese manufacturer, merging the two companies will deliver cost savings of $1.7 billion in 2022, with savings of $1.2 billion in 2020. The latter may relate to the dismissal of the 10,000 employees.

Fujifilm and Xerox have been working together for a long time. The Fuji Xerox joint venture, of which Fujifilm had 75 percent of the shares, has been in existence since 1962 and mainly operates in the Asian market. Under the new arrangement, Fujifilm will own 50.1 percent of the shares of the new joint venture, while Xerox’s existing shareholders will receive 49.9 percent.

According to the Financial Times, this is an unusual takeover construction, which Fujifilm uses to keep enough reserves for possible new takeovers. First, the old Fuji Xerox joint venture will buy back 75 percent of Fujifilm via a $6.1 billion bank loan. Fujifilm will then use this money to acquire 50.1 percent of the shares of Xerox, after which the joint venture will merge with Xerox. The newly merged company will be led by Xerox CEO Jeff Jacobsen, with Fujifilm CEO Shigetaka Komori presiding over him.