Fujifilm chairman accuses Xerox CEO of bad manners

The Xerox/Fuji feud is looking more and more like a bad breakup.

Fujifilm Holdings Corp. Chairman Shigetaka Komori responded in kind this week to a “Dear John” letter from new Xerox Corp. CEO John Visentin, in which he detailed why the two companies could no longer be together.

“Our agreements to combine Xerox and Fuji Xerox were fairly negotiated at arms’ length by sophisticated parties and were unanimously approved by the boards of directors of both Xerox and Fujifilm,” Komori said in his letter to Visentin. “Although you desperately attempt to justify your unilateral termination of these agreements in your letter, we are confident that the court will see through your misleading misstatements and conclude what is obvious to objective observers: that your stated reasons for terminating our deal are merely a thinly veiled pretext to bargain for a higher price from Fujifilm at the behest of two minority shareholders.”

Fujifilm is suing the document company for more than $1 billion for breach of contract, stemming from the failed $6.1 billion merger that was announced in January. The Japanese photo and imaging giant in the June 18 complaint accused Xerox of engaging in “intentional and egregious conduct” in abandoning the merger.

As a result of the lawsuit, Visentin this week reached out to Komori, stating that Xerox would not “stand by and let them further harm our iconic brand.”

“No matter what you tell the Japanese media, it is abundantly clear that the bad actor here is Fujifilm, not Xerox,” Visentin said in his letter to Komori this week. “Fujifilm, as 75 percent owner and controlling partner of Fuji Xerox, has concealed from Xerox the true extent of a massive and ongoing accounting fraud at Fuji Xerox caused by Fujifilm’s own gross mismanagement.”

Fujifilm last year had acknowledged improper accounting standards at the Fuji Xerox subsidiary, which resulted in a $341 million adjustment to six years’ net profits and the resignation of Fuji Xerox Chairman Tadahito Yamamoto.

Komori in his letter said he would not “dignify every misstatement” in Visentin’s letter, but he did address the Fuji Xerox accounting debacle.

“As you very well know, Fuji Xerox has devoted extensive resources to ensure that past accounting issues have been properly resolved and there is no reason to assert that these issues continue to exist,” Komori said. “While you criticize Fujifilm as a shareholder of Fuji Xerox for its questionable accounting issue, you should note that Xerox is another shareholder of Fuji Xerox and it is (an) obvious mistake to accuse only one party of the joint venture for the accounting issue.”

Visentin earlier this week said Xerox will not renew its Fuji Xerox contract when it expires in 2021 and the company will move to accomplish three things:
• Xerox will start, in a material way, to source products from new vendors.
• Xerox will build partnerships with companies that are aligned with Xerox’s mission to provide world-class technology and solutions.
• Xerox believes the company will be much better served by not renewing its Technology Agreement with Fuji Xerox when it expires.

“As for your stated intent to not renew the Technology Agreement in 2021 and conduct business in the Asia Pacific market, we are prepared to respond by competing with Xerox here in Asia Pacific, and by marketing in territory where Xerox is currently doing business unchallenged by us, such as America and Europe,” Komori responded. “While Xerox presently has no marketing facilities here in Asia Pacific, we have global infrastructure that we can utilize for marketing worldwide. Accordingly, we believe it would be enormously costly and difficult for Xerox to gain business in Asia Pacific.”

Komori in his letter also pointed out Visentin’s bad manners in failing to attend Fuji Xerox’s June 20 annual shareholders’ meeting and board meeting, as well as publicizing his letter to Komori before Komori had received it.

“This is impolite and wrong, and I hope our communications will be in a more respectful manner going forward,” Komori wrote.

The Xerox/Fujifilm partnership dates to 1962 when the two companies agreed to a 50/50 joint venture in order to develop, produce and sell xerographic and document-related products and services in the Asia-Pacific region. Fujifilm raised its stake in the company to 75 percent in 2001. Fuji Xerox Co. Ltd. is headquartered in Tokyo.

Xerox declined to comment on Komori’s letter.

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