Xerox shares opened higher in the US Wednesday, after Fujifilm said it would takeover the struggling US printer and copier maker. Xerox also announced a fourth-quarter loss, while Fujifilm announced its three-quarter earnings results.
Xerox shares opened higher, Wednesday and were trading up 6.49% at $34.80, by around 1450 BST. Fujifilm shares closed 8.32% lower at JPY4,190.
Fujifilm announces Xerox takeover
Fujifilm said earlier Wednesday it would bring the entire Xerox business into the existing joint venture between the two firms. The combined company will retain the existing JV name of Fuji Xerox and become a subsidiary of Fujifilm.
Fuji Xerox will buy back the 75% proportion of the existing business already owned by Fujifilm, for around $6.1 billion with bank debt. Fujifilm will then use those proceeds to purchase 50.1% of new Xerox shares. Existing Xerox shareholders will collectively own 49.9% of the new Fuji Xerox company.
Xerox shareholders will receive a special cash dividend of $9.80 per share. News of the deal comes as Xerox investors have previously requested the US firm looks into possible strategic avenues.
“Fujifilm and Xerox have fostered an exceptional partnership through our existing Fuji Xerox joint venture, and this transaction is a strategic evolution of our alliance,” said Shigetaka Komori, chairman and CEO of Fujifilm.
Xerox CEO, Jeff Jacobson, said: “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.”
In order to cut costs in the newly enlarged Fuji Xerox business, Fujifilm is planning on cutting 10,000 jobs from the organisation, in the Asia-Pacific region.
Xerox results disappoint
The Fuji takeover news comes as Xerox reported total 2017 revenues of $10.7 billion, 4.7% lower than 2016 but in line with company guidance. Fourth quarter revenues, meanwhile, were $2.7 billion, 2% lower than a year earlier, in constant currency.
Fujifilm’s own earnings results were also published Wednesday. They showed revenue growth in the nine months to the end of December 2017 of 6.9%, down from 7.3% over the same period in 2016. However, it’s operating income growth accelerated to 8.7% from 8%, over the same two periods.