The feud between Xerox Holdings Corp. and Fujifilm Holdings Corp. may finally be over.
Fuji has agreed to acquire Xerox’s one-quarter stake in Fuji Xerox for $2.3 billion, the two companies said Tuesday. Both companies’ boards agreed to the deal, which will give Fujifilm 100 percent ownership of the 57-year-old joint venture.
“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 Fujifilm Chairman and CEO Shigetaka Komori in a statement Tuesday. “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 will operate as a wholly owned subsidiary of Fujifilm and will continue to supply to Xerox after completion of the transaction, Fuji officials said. As part of the deal, Fuji will withdraw its $1 billion breach of contract lawsuit against Xerox.
“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, 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.”
It’s a sharp departure from Visentin’s words in June 2018.
“We cannot stand by and let them further harm our iconic brand,” Visentin said in a statement following the filing of Fuji’s lawsuit last year. “The lawsuit is nothing more than a desperate and misguided negotiating ploy to save their takeover attempt, which to this day remains enjoined by order of the New York State Supreme Court, and could take our focus away from serving our customers.”
Visentin had vowed at the time to not renew the company’s Fuji Xerox contract when it expires in 2021 and to source products from new vendors, a move he said at the time would create “enormous opportunity for Xerox to sell products directly into the growing Asia-Pacific market with sole and exclusive use of the valuable Xerox name, and a more efficient, better-managed supply chain than exists with Fuji Xerox today.”
The feud between the two companies began early last year when Xerox majority shareholders Darwin Deason and Carl Icahn called for Xerox to rethink its $6.1 billion deal with Fujifilm that would have given the Japanese company a 51 percent ownership stake in Xerox. Icahn and Deason arguably were responsible for the ousting of former Xerox CEO Jeff Jacobson, who had brokered the failed merger, as well as five of Xerox’s former board members.
With the merger off the table, Visentin and Komori went head to head, with Komori chastising Visentin for his bad manners.
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.
Visentin on Tuesday said Xerox would use funds from the sale to pursue mergers and acquisitions in core and adjacent industries, return capital to shareholders and pay down its $550 million December 2019 debt maturity.
Shares of Xerox stock (NYSE: XRX) were up nearly 6 percent at $36.63 in heavy volume Tuesday afternoon.