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Xerox to sell stake in Fuji Xerox for $2.3 billion, continue work with Fujifilm

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.

Shigetaka Komori
Shigetaka Komori

“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.

John Visentin
John Visentin

“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.

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Xerox’s Jacobson earned $9.5 million in 2017

xerox logoXerox Corp. CEO Jeff Jacobson earned more than $9.5 million in total compensation last year, nearly double his 2016 earnings as executive vice president and president, Xerox Technology.

In a Tuesday preliminary proxy filing with the Securities and Exchange Commission, Xerox reported Jacobson’s 2017 base salary was $1 million, with stock awards totaling $6.5 million and non-equity incentive plan compensation of roughly $1.94 million. All other compensation was listed as $78,138, which includes personal use of aircraft, life insurance and 401(k) and Xerox Supplemental Savings Plan contributions.

Jacobson in 2016 earned a base salary of $812,500, received $3.5 million in stock awards and $965,000 in non-equity incentive plan compensation, for a total salary of $5.35 million. Then Chairman and CEO Ursula Burns earned a total compensation of $14.07 million in 2016.

The document company, since announcing in late January it would merge with longstanding partner Fujifilm Holdings Corp., has been embroiled in a public battle with two of its largest shareholders, Darwin Deason and Carl Icahn, over the proposed merger and company leadership.

In March, Deason filed suit against Xerox, its board and Jacobson to allow Deason and other shareholders to nominate a full slate of directors for consideration and election at Xerox’s 2018 annual meeting. Icahn Partners LP has notified Xerox of its intention to nominate four directors for election at the company’s annual meeting in opposition to the nominees recommended by the Xerox board.

Xerox has not yet set a date or location for its annual meeting, which last year was held in May.

In Tuesday’s SEC filing, Jacobson and Xerox Chairman Robert Keegan urged shareholders to vote against Icahn’s four nominees and in favor of the 10 director nominees, stating that support of the nominees was “integral to the success of our company and proposed transaction with Fujifilm.”

When Fuji and Xerox announced the $6.1 billion deal, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people. There was no indication how or if that might affect Xerox’s staff in Rochester.

Shares of company stock (NYSE: XRX) were down slightly to $28.20 per share in light trading Wednesday morning.

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Xerox faces shareholder lawsuits

Fuji XeroxIn the span of four weeks, Xerox Corp. has found itself the defendant in two separate lawsuits filed by one of its largest shareholders.

Darwin Deason, Xerox’s third-largest shareholder, has filed suit against Xerox, Xerox CEO Jeff Jacobson and Xerox’s board of directors to, among other things, allow Deason and other shareholders to nominate a full slate of directors for consideration and election at Xerox’s 2018 Annual Meeting. The complaint was filed on March 2 in the Supreme Court of the State of New York, New York County.

The complaint notes that for the upcoming 2018 annual meeting of stockholders, the time to provide advance notice expired on Dec. 11, 2017. Deason’s suit also notes that more than six weeks later, Xerox and its board made a series of “very significant decisions and disclosures that were highly material to Plaintiff’s (and likely other Xerox shareholders’) decisions concerning potential nomination of directors.”

Those decisions include the following, Deason contends:
• approving a dramatically one-sided sale of 50.1 percent of Xerox to Fujifilm Holdings Corp. for virtually no control premium and entrenching themselves with board and executive positions with the new entity post-closing;
• disclosing for the first time the existence of a deal-restrictive “crown-jewel” lock-up right in favor of Fuji under joint venture agreements with Fuji and that such lock-up curtailed Xerox’s ability to pursue strategic alternatives with any entity other than Fuji; and
• disclosing for the first time that, in connection with Xerox’s change of control transaction with Fuji, defendant agreed to make Fuji’s crown jewel lock-up rights permanent going forward.

The complaint alleges that the decisions made by the board “dramatically change the circumstances of the company’s prospects, and were unknown to Xerox’s stockholders, including plaintiff, prior to the Dec. 11, 2017 advance notice bylaw deadline. These new facts also highlight that Xerox is at a crossroad and the Xerox board faces imminent and critical decisions concerning the future of the company.”

Deason contends that stockholders should be given an opportunity to “determine, in view of these changed circumstances, whether to elect a board that will reevaluate if the proposed change of control transaction with Fuji is in the best interest of Xerox’s stockholders and whether Xerox should take any action with respect to the deal-prohibitive crown jewel lock-up, including termination of such lock-up right—a legal right Xerox has at this time, but the current Xerox Board has inexplicably refused to pursue—so that the company can engage in a fair and transparent bidding process.”

On Feb. 26, Deason sent a letter to Xerox officials requesting that the Dec. 11 director nomination deadline be waived, a request that was denied, he contends. In the lawsuit, Deason said that without injunctive relief, he and all other Xerox shareholders will be “irreparably harmed.”

“Indeed, Plaintiff and all Xerox shareholders will be deprived of their most fundamental corporate right—the right to exercise their franchise and have a voice in the future direction of the company,” the suit reads.

Deason and Xerox’s largest shareholder, Carl Icahn, have called for Jacobson’s termination from his position since rumors of the Xerox/Fuji deal began to surface in January. Icahn and Deason have been quite vocal with their discontent.

Icahn has been buying and selling shares since early last month. Icahn sold more than 1.2 million shares in early February, according to Securities and Exchange Commission documents. A week later, he purchased 15.3 million shares.

In the earlier lawsuit filed Feb. 13, Deason was seeking to enjoin the transaction, terminate the Xerox/Fuji joint venture lock-up and joint venture agreements and pursue strategic alternatives for Xerox.

“After having considered all strategic alternatives available to the company, Xerox’s board of directors remains steadfast in its belief that the combination with Fuji Xerox is the best path to create value for the company and its shareholders. It is unfortunate that Mr. Deason is seeking to interfere with Xerox shareholders’ right to decide and is relying on meritless legal claims,” Xerox officials said in a statement at the time. “Xerox has fully disclosed the joint venture agreements, and the company will respond to Mr. Deason’s legal claims through the appropriate legal channels in due course.”

When Fuji and Xerox announced the $6.1 billion deal Jan. 31, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

Shares of Xerox stock (Nasdaq: XRX) were down slightly at $30.08 in midday trading Friday. The document company’s 52-week range is $26.64 to $37.42.

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Shareholder sues Xerox over deal with Fuji

Fuji XeroxThe gloves are off.

Darwin Deason, Xerox Corp.’s third-largest shareholder, has filed a lawsuit against Fujifilm Holdings Corp.; Xerox; current Xerox board members; and Ursula Burns, Xerox’s former chairman and CEO. The complaint was filed Feb. 13 in the Supreme Court of the State of New York, New York County.

In the complaint, Deason alleges the following:

  • The Xerox/Fuji transaction is the result of an improper and fraudulently concealed “crown jewel” lock-up agreement that Xerox entered into with Fuji 17 years ago, that was never disclosed to Xerox’s shareholders before the signing of the Xerox/Fuji transaction;
  • The “crown jewel” lock-up agreement precludes a transparent and fair process for the potential sale of Xerox;
  • Despite its duty to do so, Xerox’s board fraudulently never disclosed the “crown jewel” lock-up;
  • Fuji and Fuji Xerox participated in a “WorldCom”-like accounting scandal that was uncovered in 2017 and gave Xerox the right to terminate the crown jewel lock-up provision, but the Xerox Board failed to terminate the provision;
  • Xerox publicly admitted that the lock up “limit[ed] Xerox’s strategic flexibility,” which caused the Xerox board to sell 50.1 percent of Xerox to Fuji;
  • Xerox/Fuji deal is extremely off-market:
    – No control premium for Xerox shareholders
    – 50.1 percent/49.9 percent Fuji control
    – Xerox CEO and board members retain jobs
    – No Xerox market check or sale process
    – Xerox share price has declined 2.4 percent since the unaffected date (Jan. 10) to Friday’s close (date prior to issuance of Icahn/Deason letter); and
  • Deason seeks to enjoin the transaction, terminate the Xerox/Fuji joint venture lock-up and joint venture agreements and pursue strategic alternatives for Xerox.

For its part, Xerox officials said Deason’s allegations are without merit and the company will vigorously defend itself.

“After having considered all strategic alternatives available to the company, Xerox’s board of directors remains steadfast in its belief that the combination with Fuji Xerox is the best path to create value for the company and its shareholders. It is unfortunate that Mr. Deason is seeking to interfere with Xerox shareholders’ right to decide and is relying on meritless legal claims,” company officials said in a statement. “Xerox has fully disclosed the joint venture agreements, and the company will respond to Mr. Deason’s legal claims through the appropriate legal channels in due course.”

Xerox —on the heels of Monday’s open letter from shareholders Deason and Carl Icahn—is calling many of the Icahn/Deason letter’s statements “misleading” and “inaccurate.” Xerox’s board has thus far declined to engage in a public debate, officials said Tuesday morning, but the letter “warrants a written response to ensure the facts are clear for all Xerox shareholders.”

In their letter, the two shareholders, who collectively own about 15 percent of Xerox’s shares, called to issue a deal between Xerox and Fujifilm in which “without putting up any cash, (Fuji) will receive (1) an additional, indirect 25 percent interest in a Fuji subsidiary that just last year disclosed a $360 million accounting scandal caused by a ‘culture of concealment’ and Fuji’s failure to have adequate management systems, and (2) a one-time special dividend financed with our own assets.”

When Fuji and Xerox announced the $6.1 billion deal Jan. 31, it was noted that the merger would give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm, following the merger announcement, said it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

In its statement Tuesday, Xerox said the proposed combination of Xerox and Fuji Xerox followed a year-long review of value-enhancing alternatives available to the company. That review found that the proposed merger “delivers significantly more value to Xerox shareholders than would be achievable on a standalone basis.”

Icahn and Deason have asked shareholders to reject the deal, citing a number of issues. The two shareholders contend that the economics of the transaction disproportionately favor Fuji at Xerox shareholders’ expense.

“When we sketch out the financials of the deal, this is our conclusion,” Icahn and Deason wrote. “We—the existing Xerox shareholders—are selling approximately $535 million of normalized annual recurring cash flow for about $1.25 billion. In other words, we are selling control of Xerox for a cash flow multiple barely exceeding 2.3x.”

But Xerox in its statement called their math “suspect.”

“This analysis is just plain wrong,” Xerox officials wrote. “As discussed in prior presentations to investors, Xerox shareholders receive in the transaction a $2.5 billion dividend at closing; 49.9 percent of the combined Xerox and Fuji Xerox; and 49.9 percent of the benefit of the value created from at least $1.7 billion of annual cost savings, including $1.25 billion in cost synergies that are only achievable via this transaction.”

Icahn and Deason in their letter suggested “freeing the company from the shackles of the Fuji Xerox joint venture,” a strategy that Xerox officials say is not viable.

“The joint venture between Xerox and Fujifilm has existed in various forms since 1962,” Xerox officials note. “The current structure dates to 2001, when Fujifilm acquired additional shares in the joint venture to bring its ownership to 75 percent.”

The agreement is a binding legal document “that cannot be simply wished away, renegotiated or dissolved because Mr. Icahn and Mr. Deason desire it so.”

To Icahn and Deason’s claim that Xerox shareholders will become passive minority owners, with no opportunity to receive a control premium, Xerox officials said its board negotiated “strong minority protections,” including five independent Xerox designated directors to serve for five years.

Xerox also noted that Chief Executive Jeff Jacobson—whose firing Icahn and Deason have demanded for weeks—will represent one of the seven Fujifilm board designees and serve as CEO of the combined company.

The document company noted that while Icahn and Deason contend that the company’s revenue and margin have continued to decline in the last three years, its full-year 2017 results “clearly demonstrate that the strategy we have implemented is working as we met or exceeded every financial metric we guided to in 2017.”

“In conclusion, Mr. Icahn and Mr. Deason fail to provide an actionable plan or any cogent ideas to make their scheme a reality,” Xerox officials said in their statement. “Following their playbook would be both highly irresponsible and unlikely to succeed, particularly given the terms and constraints of the existing Fuji Xerox joint venture agreement, and the realities of today’s competitive environment.”

Icahn on Feb. 5 sold 140,011 shares of the company’s stock, at a total value of $4.55 million. The transaction was disclosed in a Securities and Exchange Commission filing last week. Shares of Xerox stock (Nasdaq: XRX) were down more than 2 percent to $29.25 in Tuesday morning trading.

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Icahn, Deason urge shareholders to kill Xerox merger with Fujifilm

Billionaire investors Carl Icahn and Darwin Deason on Monday said the pending merger of Xerox with Fujifilm will signal the death of the Rochester-founded company and are urging fellow shareholders to put the kibosh on the deal.

They also called the current Xerox board of directors “ostriches” whofujixerox have buried “their heads in the sand while the world slowly falls apart around them.”

“Unless we do something, this latest Fuji scheme will be the company’s final death knell,” Icahn and Deason wrote in a joint statement appearing on Icahn’s website. “We urge you—our fellow shareholders—do not let Fuji steal this company from us. There is still tremendous opportunity for us to realize value on our own if we bring in the right leadership.”

Xerox announced on Jan. 31 the merger with longtime partner Fujifilm for $6.1 billion. Fujifilm would have a 50.1 percent ownership share. In return, Xerox shareholders would receive $9.80 per share.

Icahn and Deason together own 15 percent of Xerox shares. In the blog, they wrote, “The transaction has a tortured, convoluted structure, but it was best summarized by Shigetaka Komori, Fuji’s Chairman and CEO, when he boasted to the Nikkei Asian Review that the “scheme will allow us to take control of Xerox without spending a penny.

“It is really a remarkable achievement by Fuji. Without putting up any cash, they will acquire majority control and ownership of a venerable American icon. In exchange, we—the existing Xerox shareholders—will receive:

  1. an additional, 25 percent interest in a Fuji subsidiary that just last year disclosed a $360 million accounting scandal caused by a ‘culture of concealment.’
  2. a one-time special dividend financed with our own assets.”

In an emailed statement, Xerox officials said a comprehensive review of strategic and financial alternatives conducted over many months by the independent members of the Xerox board of directors, in consultation with independent financial and legal advisers, considered several other options in detail. Advisers concluded that the combination with Fuji Xerox was the best path to create value for Xerox shareholders.

“The transaction provides shareholders with the opportunity to benefit from ownership in a combined company that has enhanced growth prospects and a stronger financial profile to support future value creation, as well as an immediate substantial dividend payment. Xerox remains committed to ensuring the actions it is taking prioritize the best interests of its shareholders, customers, employees and various other stakeholders around the world,” Xerox officials said in the statement.

In late January, Icahn and Deason called for the sale of Xerox and the ouster of CEO Jeff Jacobson. Just days later, the rumored merger with Fujifilm became official.

Icahn and Deason said there is still “enormous” value for Xerox shareholders that “does not involve selling control to Fuji without a premium.” Rather, they wrote, it entails breaking free from Fuji “and bringing in leadership with the vision and operational expertise to revive the company.”

They believe Xerox should move into software, security and services “while maintaining the existing dominant market share position by leveraging the company’s strong position in higher-end enterprise market.”

That is not possible, they wrote, if shareholders “allow this board of directors to cede control of our company to Fuji. Nor will it be possible if we simply vote the deal down and allow this board of directors to remain in control of Xerox. They have proven time and time again to be nothing more than ostriches burying their heads in the sand while the world slowly falls apart around them.”

You can find the joint statement by Icahn and Deason here.

Despite the pushback, Xerox shares (Nasdaq: XRX) were trading heavily Monday, closing the day at $29.95, up more than 1 percent from opening. The company’s 52-week range was $26.64 to $37.42.

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Xerox cites progress in 4th quarter report

fujixeroxFollowing its announcement of a merger agreement with Fujifilm Holdings Corp., Xerox Corp. on Wednesday reported a fourth-quarter earnings drop and roughly flat sales.

For the quarter ended Dec. 31, Xerox reported revenue of $2.75 billion, compared with $2.73 billion in the fourth quarter a year ago.

The company reported a net loss from continuing operations of $196 million, or 76 cents per diluted share, compared with income of $185 million, or 70 cents per share, in the same period a year ago.

Excluding special items, Xerox reported earnings of $1.04 in the quarter. Analysts polled by Zacks Investment Research had expected EPS of 94 cents.

“One year ago I told the market that to position Xerox for long-term success and deliver shareholder value, we would focus on the growth areas in our industry to improve our revenue trajectory while continuing with our strategic transformation initiatives to increase our profitability and margins,” Xerox CEO Jeff Jacobson said in a statement. “With positive results across all metrics, our fourth-quarter performance clearly demonstrates the progress we have made and enabled us to deliver on our commitments for the full-year.”

For fiscal 2017, Xerox reported total revenue of $10.3 billion, down nearly 5 percent from 2016. Adjusted EPS for the full year was  $3.48.

Xerox is expecting earnings of $2.30 to $2.50 per share in fiscal 2018, with adjusted earnings in the range of $3.50 to $3.70. The company expects revenue to decline 2 to 4 percent in 2018.

Xerox Wednesday announced a $6.1 billion agreement that will give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

Fujifilm announced it would slash 10,000 Fuji Xerox jobs, or roughly 15 percent of the combined company’s workforce. It is unclear if the job cuts will affect Xerox’s nearly 4,000 local staffers, hundreds of whom are being relocated from the company’s former headquarters downtown to its Webster campus in the coming months.

Xerox shares (NYSE: XRX) skyrocketed to more than $35 Wednesday on news of the acquisition, but have since receded. At midday Thursday, shares were trading at around $33. More than 4 million shares traded hands yesterday.

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Xerox announces merger with Fujifilm

Fuji XeroxXerox Corp., long a regional icon and one-third of Rochester’s one-time Big Three employers, settled rumors on Wednesday by announcing that the document company has agreed to merge with longstanding partner Fujifilm Holdings Corp.

The $6.1 billion deal will give Fujifilm 50.1 percent ownership of the combined company, to be known as Fuji Xerox. Xerox shareholders will receive a $2.5 billion special cash dividend, or roughly $9.80 per share, funded from the combined company’s balance sheet, and will own 49.9 percent of the company.

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.

“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. The Document Solutions business represents a significant part of Fujifilm’s portfolio, and the creation of the new Fuji Xerox allows us to more directly establish a leadership position in a fast-changing market,” said Shigetaka Komori, chairman and chief executive of Fujifilm, in a statement. “We believe Fujifilm’s track record of advancing technology in innovative imaging and information solutions—especially in inkjet, imaging, and AI areas—will be important components of the success of the new Fuji Xerox.”

Separately on Wednesday, Fujifilm announced it would slash 10,000 jobs globally at the Fuji Xerox subsidiary, which last year employed more than 45,000 people.

“The market environment surrounding the company’s subsidiary Fuji Xerox has grown increasingly severe,” Fujifilm said in a statement.

It is unclear if the job cuts will affect Xerox’s nearly 4,000 local staffers, hundreds of whom are being relocated from the company’s former headquarters downtown to its Webster campus in the coming months.

“It’s hard for me to imagine that those 10,000 jobs will come purely from the joint venture’s 45,000, and none from Xerox’s 34,000,” said Brighton Securities Chairman George Conboy. “If the combined concern will have 75,000 employees, I think it’s reasonable to expect the combined concern will see a 15 percent haircut in employment. It will not fall evenly on every location or every division. But to think that in Rochester we’re going to escape the knife, I think is unrealistic.

“This deal has managed to preserve jobs of senior management, while cutting loose a solid 15 percent of the company’s workforce,” Conboy added.

But Greater Rochester Chamber of Commerce President and CEO Bob Duffy said everything he had heard so far about the merger was positive.

“Combining the two is going to maximize the strengths of both,” Duffy said. “And while the recent move from downtown to Webster was not great for downtown office space occupancy, the great news is the jobs stayed here. And we want to do everything we can to keep those jobs here and growing.”

The new Fuji Xerox will have dual headquarters in Norwalk, Conn., and in Minato, Tokyo, with a presence in more than 180 countries. The combined company will go to market and maintain the iconic “Xerox” and “Fuji Xerox” brands within its respective operating regions.

“The proposed combination has compelling industrial logic and will unlock significant growth and productivity opportunities for the combined company, while delivering substantial value to Xerox shareholders,” 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 addition, the combined company’s strong financial profile will enable investments that support continued market leadership, while also providing opportunities for increasing capital returns over time.”

Duffy said he will work with Monroe County Executive Cheryl Dinolfo to advocate and support the local Xerox facility.

“We’re hoping with the combined R&D and technology expertise the company will grow strong,” Duffy said. “We don’t want to see job reductions here at all. We’d love to see jobs increase.”

For that to happen, he added, local business and community leaders must support the home-grown company.

“Rochester often has a tendency of lamenting when companies leave or reduce, but often not being there to help them when they’re in business,” Duffy explained. “If we ignore that then we really don’t have the right to complain when those jobs are reduced.”

Dinolfo said Xerox holds a special place in Rochester history.

“I am hopeful that the company’s future here remains strong,” she said. “I have contacted Xerox and Chamber of Commerce President Bob Duffy to learn more about this merger and to extend Monroe County’s assistance in whatever way necessary. Moving forward, the County will continue to monitor the situation closely and will be prepared to act in the event local jobs are impacted.”

Duffy also said he’d like to see Xerox move its U.S. headquarters back to Rochester.

“I’d love to see it all here at some point and I’ve not gotten a reaction from that yet, but I’ve talked to at least two CEOs in my memory making that pitch,” he said. “I will continue to make that pitch.”

Upon close of the transaction, Jacobson will serve as chief executive officer of the new Fuji Xerox.

The combined company’s Board of Directors will include 12 members, seven of whom will be appointed by the Fujifilm Board. Five independent directors will be appointed from the Xerox Board. Komori will serve as chairman of the board.

“The merger of the two companies into the joint venture isn’t a deal that’s coming from a place of strength,” Conboy said. “It’s a deal coming from a place where these companies are consolidating to deal with a market that has been at best flat over the last several years.”

Jacobson in recent weeks has come under fire as two of Xerox’s largest shareholders called for both his ousting and increased transparency.

“He is neither qualified nor capable of successfully running this company, let alone negotiating a major strategic transaction that will do more than save his own job,” said Carl Icahn and Darwin Deason in a joint statement last week.

The new Fuji Xerox deal comes less than a year after Fujifilm acknowledged improper accounting standards at the subsidiary, which resulted in a $341 million adjustment to six years’ net profits and the resignation of Fuji Xerox Chairman Tadahito Yamamoto.

“Today’s announcement follows a comprehensive review of our strategic and financial alternatives led by Xerox’s independent directors that began after the separation of Conduent in 2016,” Xerox Chairman Robert Keegan said in a statement. “Upon careful consideration of all alternatives available to the company, the board of directors concluded that this combination is clearly the best path to create value for our shareholders. An attractive, certain cash dividend, together with participation in the future success of the combined company, presents a compelling value equation for Xerox shareholders. We are excited to strengthen our longstanding relationship with Fujifilm as we enter the next phase of Xerox’s transformation journey.”

The combined company will drive sales of $18 billion, officials said, and is expected to deliver at least $1.7 billion in total annual cost savings by 2022, with roughly $1.2 billion of the total cost savings expected to be achieved by 2020.

The new company expects to incur approximately $1.4 billion in one-time integration and restructuring costs, mainly in the first three years. The deal is expected to close some time in the second half of 2018.

Shares of Xerox stock (NYSE: XRX) were trading up more than 7 percent at $35.13 in heavy morning trading.

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