Market Overview

FUJIFILM Holdings and Xerox Announce Agreement to Combine Fuji Xerox Joint Venture with Xerox


Creates a Global Leader in Innovative Print Technologies and Intelligent
Work Solutions

  • Xerox shareholders to receive a $2.5 billion special cash dividend, or
    approximately $9.80 per share1, and 49.9% of the combined
    company; Fujifilm to own 50.1%
  • Combined company to deliver at least $1.7 billion in total cost
    savings, with $1.2 billion to be achieved by 2020
  • Accelerates path to revenue growth through global reach,
    industry-leading scale and enhanced innovation capabilities
  • Well-positioned to lead in growing business areas such as high-speed
    inkjet, industrial print and workplace solutions, while leveraging
    Fujifilm's extensive technologies
  • Combined company will have enhanced financial flexibility for future
    growth investments and capital returns
  • Combined company will have dual headquarters in Norwalk, CT, U.S. and
    Minato, Tokyo, Japan, and will maintain the iconic "Xerox" and "Fuji
    Xerox" brands within its respective operating regions

Holdings Corporation
("Fujifilm") (TSE:4901) and Xerox
("Xerox") (NYSE:XRX) today announced that they have
entered into a definitive agreement to combine Xerox and their
longstanding Fuji Xerox joint venture. The combined company will be a
global leader in innovative print technologies and intelligent work
solutions with annual revenues of $18 billion and leadership positions
in key geographic regions.

This press release features multimedia. View the full release here:

This proposed combination provides Xerox shareholders with significant
cash at closing, as well as a substantial interest in the significantly
enhanced combined company. Under the terms of the agreement, Xerox
shareholders will receive a $2.5 billion special cash dividend, or
approximately $9.80 per share1, funded from the combined
company's balance sheet, and own 49.9% of the combined company at
closing. The cash dividend represents more than 30% of Xerox's
unaffected share price of $30.35 based on closing share price as of
January 10, 2018. Fujifilm will own 50.1% of the combined company and
provide important operational support and transformational leadership.

The transaction has been unanimously approved by the Boards of Directors
of both Fujifilm and Xerox. The combined company will be named "Fuji
Xerox" and trade on the NYSE under the ticker XRX. The new Fuji Xerox
will have dual headquarters in Norwalk, CT, U.S. and in Minato, Tokyo,
Japan, with presence in over 180 countries. The combined company will go
to market and maintain the iconic "Xerox" and "Fuji Xerox" brands within
its respective operating regions.

Shigetaka Komori, chairman and chief executive officer of Fujifilm,
said, "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. 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."

Mr. Komori added, "I am confident that Fujifilm's ability to drive
change as well as its experience of successful reinvention will give a
competitive edge to the new Fuji Xerox, delivering significant value
creation to shareholders of both the new Fuji Xerox and Fujifilm. We are
delighted to welcome Xerox and its employees to the Fujifilm family and
look forward to combining our strengths towards jointly shaping the
future of our industry."

Jeff Jacobson, chief executive officer of Xerox, said, "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. 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."

Robert J. Keegan, chairman of Xerox's Board of Directors, said, "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. 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."

Clear Leader in Innovative Print Technologies and Intelligent Work

Xerox shareholders will have the opportunity to participate in the new
Fuji Xerox's accelerated revenue trajectory and long-term value creation
potential. The transaction builds on the 56-year collaborative history
between Fujifilm and Xerox to create a global leader in innovative print
technologies and intelligent work solutions with enhanced scale and
innovation capabilities:

  • Global leader with combined revenue of approximately $18 billion
    and nearly $120 billion total addressable opportunity.
  • Enhanced scale with presence in over 180 countries and covering
    key geographies including North America, Japan, Europe, Asia Pacific
    and China.
  • Combined leadership with a strong track record of operational
    excellence, transformation experience, customer relationships and
    industry expertise.
  • Improved revenue profile and growth trajectory by leveraging
    the combined expertise, competitive strengths and geographic reach of
    the two companies.
  • World-class innovation capabilities to define the future of
    innovative print technologies and intelligent work solutions
    bringing together two R&D and innovation leaders, along with
    Fujifilm's extensive expertise. The new Fuji Xerox will be
    well-positioned to lead in growing areas such as high-speed inkjet,
    packaging, industrial print and workplace automation, as well as
    future development opportunities in artificial intelligence, machine
    learning, internet of things and augmented reality.
  • Strengthened balance sheet and cash flow generation to provide
    flexibility to support strategic investments in growth and enable
    increasing capital returns.

Significant Value Creation Opportunity

This highly synergistic combination is expected to deliver at least $1.7
billion in total annual cost savings by 2022, with approximately $1.2
billion of the total cost savings expected to be achieved by 2020. The
targeted cost savings represent approximately 10% of the total cost base
of the new Fuji Xerox and will drive significant margin expansion over
the next four years.

Of the total $1.7 billion cost savings, $1.25 billion is related to the
synergies that will be achieved through the transaction. In addition,
the combined company will benefit from a cost reduction program
commencing immediately at the existing Fuji Xerox joint venture, which
is targeted to generate approximately $450 million of cost savings on an
annualized basis. These amounts are incremental to Xerox's ongoing
Strategic Transformation initiatives. The new company expects to incur
approximately $1.4 billion in one-time integration and restructuring
costs, mainly in the first three years.

The new Fuji Xerox will also have significant revenue synergy
opportunities over time as it capitalizes on its global reach,
industry-leading scale and enhanced innovation capabilities.
Importantly, the combined company will have an increased total
addressable opportunity estimated at nearly $120 billion and a strong
presence in attractive growth markets, allowing the new company to
become more competitive and better able to serve customers and business
partners globally.

Balance Sheet and Capital Allocation

The new Fuji Xerox expects to maintain investment grade credit ratings
at closing. The new company will maintain Xerox's current $1.00 annual
dividend per share and commitment to return at least 50 percent of free
cash flow to shareholders. The enhanced financial flexibility of the
combined company is expected to allow for greater capital deployment
toward targeted growth initiatives, share repurchases and increased
dividends over time.

Leadership and Governance

Upon close of the transaction, Jeff 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. Shigetaka Komori will
serve as chairman of the board.

Financing Commitments

Financing commitments of $2.5 billion have been provided by Citigroup
Global Markets Inc. and Morgan Stanley Senior Funding, Inc.

Path to Completion

The transaction, which is expected to close in the second half of
calendar year 2018, is subject to the satisfaction of customary closing
conditions and regulatory approvals and approval by Xerox shareholders.


Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. and Morgan Stanley &
Co. LLC are serving as exclusive financial advisors to Fujifilm, and
Morrison & Foerster LLP is acting as legal counsel. Centerview Partners
LLC is serving as exclusive financial advisor to Xerox and Paul, Weiss,
Rifkind, Wharton & Garrison LLP is acting as legal counsel.

Xerox Conference Call

Xerox will host a conference call today at 8:00 a.m. ET to discuss this
transaction. The webcast is available at
A replay of the call will be available at

For More Information

Additional information regarding the transaction can be found on

About Fujifilm

FUJIFILM Holdings Corporation in Tokyo, Japan, brings continuous
innovation with leading-edge, proprietary technologies by leveraging its
photography expertise into a broad range of industries globally,
including healthcare, graphic systems, highly functional materials,
optical devices, digital imaging and document products. These products
are based on its extensive portfolio of chemical, mechanical, optical,
electronic and imaging technologies. Fujifilm has operated in North
America since 1965, with approximately 6,000 employees currently in the
U.S. and Canada. For the year ended March 31, 2017, the company had
global revenues of $20.7 billion, at an exchange rate of 112 yen to the
dollar. Fujifilm is committed to responsible environmental stewardship
and good corporate citizenship. For more information, please visit:

About Xerox

Xerox Corporation is a technology
leader that innovates the way the world communicates, connects and
works. We understand what's at the heart of sharing information – and
all of the forms it can take. We embrace the integration of paper and
digital, the increasing requirement for mobility, and the need for
seamless integration between work and personal worlds. Every day, our
innovative print technologies and intelligent work solutions help people
communicate and work better. Discover more at
and follow us on Twitter at @Xerox.

About Fuji Xerox

Founded in 1962, Fuji Xerox Co., Ltd. is a leading company in the
Document Services & Communications field, offering solutions and
services to help customers resolve their business challenges. Underlying
our solutions and services are our world-class office multifunction
devices, printers and production printers that we develop and
manufacture for worldwide distribution. Together with cloud and mobile
solutions, Fuji Xerox builds a communications environment that enable
our customers to access the right information, at the right time, and in
the right form—thereby contributing to their valuable communications.
Fuji Xerox is a 75-25 joint venture between FUJIFILM Holdings
Corporation and Xerox Corporation, and its direct sales force covers
Japan and the Asia-Pacific region including China. As a $10 billion
enterprise, we employ approximately 47,350 people globally, with more
than 80 domestic and overseas affiliates / sales subsidiaries. For more
information, please visit

Additional Information and Where to Find It

This release may be deemed to be solicitation material in respect of the
transactions with FUJIFILM Holdings Corporation ("Fujifilm") described
herein (the "Transactions") and/or the matters to be considered at the
Company's 2018 Annual Meeting of Shareholders. In connection with the
Transactions and the 2018 Annual Meeting, Xerox plans to file with the
Securities and Exchange Commission ("SEC") and furnish to Xerox's
shareholders one or more proxy statements and other relevant documents.
able to obtain a free copy of documents filed with the SEC at the SEC's
website at
In addition, Xerox's shareholders may obtain a free copy of Xerox's
filings with the SEC from Xerox's website at
under the heading "Investor Relations" and then under the heading "SEC

Participants in the Solicitation

The directors, executive officers and certain other members of
management and employees of Xerox may be deemed "participants" in the
solicitation of proxies from shareholders of Xerox in favor of the
Transactions or in connection with the matters to be considered at the
Company's 2018 Annual Meeting. Information regarding the persons who
may, under the rules of the SEC, be considered participants in the
solicitation of the shareholders of Xerox in connection with the
Transactions or the Company's 2018 Annual Meeting will be set forth in
the applicable proxy statement and other relevant documents to be filed
with the SEC. You can find information about Xerox's executive officers
and directors in Xerox's Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, Xerox's and such persons' other filings with
the SEC and in Xerox's definitive proxy statement filed with the SEC on
Schedule 14A.

Cautionary Statement Regarding Forward-Looking Statements

This release, and other written or oral statements made from time to
time by management contain "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. The words
"anticipate", "believe", "estimate", "expect", "intend", "will",
"should" and similar expressions, as they relate to us, are intended to
identify forward-looking statements. These statements reflect
management's current beliefs, assumptions and expectations and are
subject to a number of factors that may cause actual results to differ
materially. Such factors include but are not limited to: our ability to
address our business challenges in order to reverse revenue declines,
reduce costs and increase productivity so that we can invest in and grow
our business; changes in economic and political conditions, trade
protection measures, licensing requirements and tax laws in the United
States and in the foreign countries in which we do business; changes in
foreign currency exchange rates; our ability to successfully develop new
products, technologies and service offerings and to protect our
intellectual property rights; the risk that multi-year contracts with
governmental entities could be terminated prior to the end of the
contract term and that civil or criminal penalties and administrative
sanctions could be imposed on us if we fail to comply with the terms of
such contracts and applicable law; the risk that partners,
subcontractors and software vendors will not perform in a timely,
quality manner; actions of competitors and our ability to promptly and
effectively react to changing technologies and customer expectations;
our ability to obtain adequate pricing for our products and services and
to maintain and improve cost efficiency of operations, including savings
from restructuring actions; the risk that individually identifiable
information of customers, clients and employees could be inadvertently
disclosed or disclosed as a result of a breach of our security systems;
reliance on third parties, including subcontractors, for manufacturing
of products and provision of services; our ability to manage changes in
the printing environment and expand equipment placements; interest
rates, cost of borrowing and access to credit markets; funding
requirements associated with our employee pension and retiree health
benefit plans; the risk that our operations and products may not comply
with applicable worldwide regulatory requirements, particularly
environmental regulations and directives and anti-corruption laws; the
outcome of litigation and regulatory proceedings to which we may be a
party; the risk that we do not realize all of the expected strategic and
financial benefits from the separation and spin-off of our Business
Process Outsourcing business; the effects on our business resulting from
actions of activist shareholders; and other factors that are set forth
in the "Risk Factors" section, the "Legal Proceedings" section, the
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" section and other sections of our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and
September 30, 2017 and our 2016 Annual Report on Form 10-K, as well as
our Current Reports on Form 8-K filed with the SEC. Furthermore, the
actual results of the Transactions could vary materially as a result of
a number of factors, including, but not limited to: (i) the risk that
the transactions may not be completed in a timely manner or at all,
which may adversely affect Xerox's business and the price of Xerox's
common stock, (ii) the failure to satisfy the conditions to the
consummation of the transactions, including the receipt of certain
approvals from Xerox's shareholders and certain governmental and
regulatory approvals, (iii) the parties may be unable to achieve
expected synergies and operating efficiencies in the transactions within
the expected time frames or at all, (iv) the transactions may not result
in the accretion to Xerox's earnings or other benefits, (v) the
occurrence of any event, change or other circumstance that could give
rise to the termination of the transaction agreements, (vi) the effect
of the announcement or pendency of the transactions on Xerox's and/or
Fujifilm business relationships, operating results, and business
generally, risks related to the proposed transactions disrupting Xerox's
current plans and operations and potential difficulties in Xerox's
employee retention as a result of the transactions, (vii) risks related
to diverting management's attention from Xerox's ongoing business
operations, (viii) the outcome of any legal proceedings that may be
instituted against Xerox, its officers or directors related to the
transaction agreements or the transactions and (ix) the possibility that
competing offers or acquisition proposals for Xerox will be made. Xerox
assumes no obligation to update any forward-looking statements as a
result of new information or future events or developments, except as
required by law.

Fuji Xerox Co., Ltd. ("Fuji Xerox") is a joint venture between Xerox
Corporation and Fujifilm in which Xerox holds a noncontrolling 25%
equity interest and Fujifilm holds the remaining equity interest. In
April 2017, Fujifilm formed an independent investigation committee
("IIC") to primarily conduct a review of the appropriateness of the
accounting practices at Fuji Xerox's New Zealand subsidiary and at other
subsidiaries. The IIC completed its review during the second quarter
2017 and identified aggregate adjustments to Fuji Xerox's financial
statements of approximately JPY 40 billion (approximately $360 million)
primarily related to misstatements at Fuji Xerox's New Zealand and
Australian subsidiaries. We determined that our share of the total
adjustments identified as part of the investigation was approximately
$90 million and impacted our fiscal years 2009 through 2017. We
concluded that we should revise our previously issued annual and interim
consolidated financial statements for 2014, 2015 and 2016 and the first
quarter of 2017 the next time they are filed. Our review of this matter
has been completed. However, Fujifilm and Fuji Xerox continue to review
Fujifilm's oversight and governance of Fuji Xerox as well as Fuji
Xerox's oversight and governance over its busi

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