Fujifilm has announced that it will buy Xerox’s remaining ownership in Fuji Xerox for US$2.3 billion and drop a $1 billion breach of contract suit against the company, the last vestige of the failed merger between the two companies.
While the 57-year-old partnership of Fuji Xerox will now be wholly owned by Fujifilm, it will continue to supply Xerox after the transaction.
“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,” said Shigetaka Komori, chairman and CEO of Fujifilm, in a statement. “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.”
Fuji Xerox operates in the Asia-Pacific market and has a base of large corporate customers to which it provides office-related products and other offerings. The company has annual revenue that exceed $9.1 billion. In a statement announcing the deal, Fujifilm said “uncertainty about the future” of the global economy and increasing competition led the company to buy Fuji Xerox outright in order to have the flexibility it needs to meet market demands in the region.
In exchange for $2.3 billion, Fujifilm is not only getting ownership of Fuji Xerox, but also Xerox’s 51 percent ownership in Xerox International Partners (XIP), an OEM joint venture between Xerox and Fuji Xerox, as well as a license for some intellectual property in the printer engines and related consumables in the A4 and A3 categories that will allow Fuji Xerox to OEM products to “certain XIP customers on a worldwide basis.”
Xerox CEO John Visentin said the deal is expected to close this month but is subject to Japanese regulatory approvals.
“These agreements reset our relationship with Fujifilm and provide both companies with tremendous opportunities to grow, together and independently,” Visentin said in a statement. “These agreements also unlock significant unrealized value for our shareholders, provide greater clarity for our customers and help us speed our transformation to a digital-first company.”
Xerox said the purchase amount of its stake in Fuji Xerox and the XIP business represents a 20 times valuation for what those two businesses would have earned in 2019. The deal also extends the terms of product sourcing agreements with Fuji Xerox, and will eliminate legal expenses resulting from Fujifilm’s suit against Xerox.