More than 10.000 jobs at Xerox would be lost at its joint venture with Japan’s Fujifilm as the Japanese firm takes control of the photocopier company.
The companies said that an agreement to merge operation of Xerox with that of Fuji Xerox was reached between the two companies as the former has been struggling to hold on to demand for copiers and printers. The joint venture in Asia has been in operations since 1962
A total a cash dividend of $2.5 billion would be given to the existing shareholders of Xerox according to the Fujifilm deal. Fujifilm will control 50.1% of Fuji Xerox while Xerox would shareholders would own the rest after the completion of the deal.
About 10,000 Fuji Xerox workers is planned to be laid off by it, Fujifilm announced earlier Wednesday.
Fujifilm said that this retrenchment of jobs is part of a larger strategy by the company at restructuring itself and facing up to the enhanced competition in the market. the company expects to reduce total annual expenses by about 50 billion yen ($460 million) in the process.
“The market environment … has grown increasingly severe,” the Japanese company said in a statement.
While full year revenue fell by about 5 %, there was a loss of $196 million in the quarter ended December as reported by Xerox.
Printers, copiers, production systems and software are sold by Fuji Xerox throughout the Asia-Pacific region.
With an operational presence in more than 1980 countries, the new entity is expected to have a total combined revenue of revenue of about $18 billion. the new entity is expected to have two headquarters – one in Connecticut and the other one in Tokyo and will also retain the brands Xerox and Fuji Xerox.
The merger “will unlock significant growth and productivity opportunities,” Xerox CEO Jeff Jacobson said in a statement.
The two companies said that cost savings of at least $1.7 billion would be possible from integration of R&D, procurement and other operations.
The new entity will retain the name Fuji Xerox and become a subsidiary of Fujifilm.
Nearly half of the sales and operating profit of Fujifilm is provided by the joint venture.
Both the companies have suffered from slowing demand for photocopy products because of the culture of going paperless. A 29.4 percent drop in operating profit for the third quarter was reported by Fujifilm for its document solutions operations on Wednesday. This includes Fuji Xerox. The imaging and information segments of the company underperformed.
“This has been a speedy decision, but I believe it’s a creative one,” Fujifilm CEO Komori told reporters at a briefing. “The new structure will leverage the strengths of our three companies.”
“This transaction…offers substantial upside for shareholders of the combined companies, including current shareholders of Xerox and Fujifilm Holdings, who will own shares in a more competitive company that has enhanced opportunities for long-term growth and margin expansion,” Jacobson said in a pre-recorded video message.