Xerox and Fujifilm Holdings Company announced today that the two companies would merge in a deal valued at $6.1 billion.
The two companies have been operating a joint venture together for 56 years. The combined companies collectively generate $18 billion in annual revenues. Current Xerox CEO Jeff Jacobson will remain as CEO of the combined company. Fujifilm chairman CEO Shigetaka Komori will become chairman of the board, and Fujifilm Holdings will own 51 percent of the combined company. The deal is expected to be finalized in the second half of 2018. Previously, activist investors led by Carl Icahn had issued a call for the removal of Jacobson as CEO of Xerox.
Xerox today also announced today financial results for its latest fiscal year. The company reported a profit of $274 million of on revenues of $10.3 billion, a 4.7 percent decline. In the fourth quarter, however, Xerox reported a loss of $196 million. Jacobson says the combined company will now have access to a much larger global market as well as emerging opportunities such as industrial print, a market that is growing at two percent a year. Currently, Xerox can address a total market opportunity of $85 billion that is declining at a rate of three percent annually. The combined company has an addressable market opportunity valued at $120 billion. All told, Xerox launched 44 new products in the last fiscal year, which included 29 offerings specifically aimed at small-to-medium businesses (SMB) that are primarily being sold by 64 channel partners.
Jacobson says the combined companies will be able to generate $1.7 billion in cost saving by 2022. A full $1.2 billion of that savings will be created within the first two years post the close of the merger. Most of the savings are being generated by reducing supply chain, manufacturing, research and development costs in addition to combining corporate functions, says Jacobson.
“We’ll have a fully integrated supply chain for the combined company,” says Jacobson.
While Xerox has been stabilizing its operations by among other things expanding its focus on SMB opportunities, the company has been servicing over $8 billion in debt. The amount of debt the combined company will have was not disclosed.
It remains to be seen what impact this merger will have on the Xerox channel strategy. Xerox executives today did praise the existing go-to-market strategy Fujifilm has been executing on in Asia. But as is often the case with multi-billion mergers it might very well be well into 2019 before anything approaching a unified channel strategy for the two companies emerges.
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