The new company could explore advancements in inkjet technology and AI
The American photocopying giant Xerox will no longer be an independent company. Recently, it entered a joint venture with Japanese film company Fujifilm, wherein the latter would take a controlling stake in Xerox.
More than 55 years ago, Fujifilm and Xerox had created a joint venture called Fuji Xerox that was specific to the Asia-Pacific region. Fujifilm had a 75 per cent stake in that long-term joint venture.
Fujifilm would now buy back that stake from Fuji Xerox for around $6.1 billion and then use that to acquire a 50.1 per cent controlling stake in Xerox.
Fujifilm is valued at around $22 billion while Xerox which has been struggling for a while with the permanent and accelerating decline in its office photocopying business is valued at around $8 billion.
The deal gives Fujifilm significant leverage. According to Reuters, “the consolidation of R&D, procurement and other operations” would mean cost savings of around $1.7 billion by 2022.
The deal would create an $18 billion company, but it also has its pitfalls. Around 10,000 jobs, or one-fifth the workforce, from the Fuji Xerox workforce in the Asia-Pacific region would lose their jobs.
Carl Icahn, the billionaire American investor, who owned nearly a 10 per cent stake in Xerox was believed to have been driving force between this deal. Xerox had only a 25 per cent stake in the Asia-Pacific business of Fuji Xerox. In this new deal, although Fujifilm has a 50.1 per cent controlling stake, Xerox will still have a seat and a voice at the decision-making table – apart from being flush with a fresh injection of cash that will allow it to expand its business. The new company could potentially explore development of inkjet technology, and more excitingly explore advancements in artificial intelligence too.