Speculation is rife that Xerox is to make a deal with Fujifilm. Xerox is looking to find new growth areas to exploit as demand for its printers and copiers is decreasing.
The Wall Street Journal reports that a full takeover of Xerox is not an option. In 2017, Xerox split into two companies. Its former Xerox Document Technology division now trades under the name Xerox Corporation and the Business Process Outsourcing division, is now Conduent.
Xerox’s largest shareholder Carl Icahn, has put pressure on the company to make changes. He wrote an open letter to shareholders in December 2017 stating new leadership was required.
“We have shown time and time again that replacing an ineffective CEO can lead to billions and billions of dollars of value creation for all shareholders,”
In addition, Icahn stated Xerox had been slow to launch new products and increase revenue.
Existing Fujifilm/ Xerox Joint Venture
Fujifilm and Xerox are already involved in a joint venture, Fuji Xerox Co, dating back to the 1960s. This copier business accounts for almost half of Fujifilm’s sales and operating profit.
Just like Xerox, Fujifilm is looking to expand its business opportunities. The traditional photographic film business is in decline as digital photography and social media have made such an impact on this market.
In 2017, Fujifilm Holdings announced accounting problems led to a loss of $340 million. Leasing agreement issues in Australia and New Zealand had caused the losses. Xerox has a 25% stake in this company.
Sales in the most recent financial year for Xerox was $10.8 billion. Meanwhile, turnover for Fujifilm was ¥2.332 billion. Last summer Fujifilm Holdings set out a medium-term plan to grow sales to ¥2,600 billion by March 2020. They have reserved ¥500 billion of merger and acquisition investments.