November 6, 2019

Fujifilm acquires Xerox’s stake in Fuji Xerox

Fujifilm Holdings Corporation, certain of its subsidiaries and Xerox Holdings Corporation have entered into agreements that include the sale of Xerox’s 25 percent stake in Fuji Xerox Co., Ltd. (FX) to a subsidiary of Fujifilm; modified sourcing terms for future product programs that will ensure Xerox’s product supply continuity; the sale to an affiliate of FX of Xerox’s 51 percent stake in Xerox International Partners (XIP), an OEM joint venture between Xerox and FX, which, together with the grant of a new IP license, will allow FX to OEM certain products (such as printer engines) to named parties that are existing customers of XIP on a worldwide basis in exchange for a fixed royalty; and the dismissal of the $1 billion lawsuit Fujifilm filed against Xerox after last year’s terminated merger.

“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 Chief Executive Officer of Fujifilm. “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.”

“Full ownership of Fuji Xerox will facilitate faster decision making in a rapidly changing business environment”, Komori added. „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.

“These agreements reset our relationship with Fujifilm and provide both companies with tremendous opportunities to grow, together and independently,” said John Visentin, vice chairman and CEO of Xerox. “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.”

While it will continue to supply its products to Xerox under an existing agreement, Fuji Xerox will also strengthen its Document Solutions business in several ways, Fujifilm said in a press release.. Most important, Fuji Xerox will have expanded OEM opportunities and supply products such as printer engines to customers worldwide, including the U.S. and Europe, leveraging its world-leading product development and manufacturing capabilities.

Enhanced synergies would bring new opportunities in growth industries, Fujfilm added. Fuji Xerox’s language processing technology together with Fujifilm’s image processing technology could be utilized to develop automatically generated diagnostic reports in the medical segment. In the printing industry, Fujifilm and Fuji Xerox are expected to be better positioned to facilitate digitalization, offering one-stop solutions from analog to digital. To enhance value creation and synergy opportunities Fujifilm's graphic systems business which possesses extensive client base in commercial and package printing is to be combined with Fuji Xerox’s sales, technological, and product creation capabilities.

According to a press release, the agreements were unanimously approved by the Board of Directors of Xerox and do not require a shareholder vote. Closings of the sale transactions are subject to receipt of regulatory approval in Japan and other customary closing conditions and are expected to occur in November 2019, but there can be no assurance regarding timing of completion of the regulatory review process, which could delay timing of the closings.

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