Xerox Restructures FUJIFILM Relationship, Will Receive $2.3B from Related Transactions
Xerox Holdings Corporation announced that it has entered into agreements with FUJIFILM Holdings Corporation and certain of its subsidiaries that will simplify and set a new course for the companies’ strategic sourcing relationship going forward. The terms of the agreements include the following:
- Sale of Xerox’s 25% 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;
- Sale to an affiliate of FX of Xerox’s 51% 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
- Dismissal of the $1 billion lawsuit FUJIFILM filed against Xerox after last year’s terminated merger.
“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.”
Total after-tax proceeds to Xerox from the transactions will include accrued but unpaid dividends through the date of the closings and are expected to be approximately $2.3 billion. Xerox expects to use the proceeds opportunistically to pursue accretive M&A in core and adjacent industries, return capital to shareholders and pay down its $550 million December 2019 debt maturity.
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.
Xerox expects to provide updated 2019 guidance by mid-December 2019 that incorporates the impact of the transactions.
The Insight Partners is a one stop industry research provider of actionable intelligence. We help our clients in getting solutions to their research requirements through our syndicated and consulting research services. We specialize in industries such as Semiconductor and Electronics, Aerospace and Defense, Automotive and Transportation, Biotechnology, Healthcare IT, Manufacturing and Construction, Medical Device, Technology, Media and Telecommunications, Chemicals and Materials.