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A new frontier for Fuji Xerox

February 2, 2018

According to the CEO of Fujifilm Holdings, the company’s well-documented acquisition of Xerox is a “game changer”.

In an interview with the Nikkei Asian Review, Shigetaka Komori explained that the acquisition will allow Fujifilm to “develop products much faster at lower cost and distribute them around the world”.

The goal of the deal between the two companies was to simplify “the complex partnership arrangement”, which has already resulted in a 56-year-old collaboration, Fuji Xerox.

“The combination will create synergies and produce cost savings worth $1.7 billion a year,” Komori explained.

As things stand, Fuji Xerox’s operations are restricted to the Asia Pacific region while Xerox is limited to operating in North America and Europe; the acquisition will broaden the horizons of both companies, “allowing them to operate as one […] and unify their product development and marketing operations”.

With the “mature” printer and copier market “not expected to grow quickly”, Komori believes that “only the strongest companies with a large market share will be able to survive in this market.”

The union of Fujifilm and Xerox, if approved, would eclipse rivals, Canon and Ricoh, while creating a global copier maker on the same footing as HP. According to the terms of the acquisition, Xerox “will fully acquire Fuji Xerox, while Fujifilm will take a 50.1 percent share of Xerox and change the name of the U.S Company to Fuji Xerox.”

There will be no cash payment involved in the deal, as Fujifilm will “make the purchase by utilising the unrealised profit on its 75 percent interest in Fuji Xerox.”

But despite a positive reaction from the stock market, Moody’s Investors’ Service has revealed that “it will put its A1 debt ratings for Fujifilm on review for possible downgrade”.

“The review for downgrade reflects the potential that Fujifilm Holdings’ business profile will weaken, due to its larger exposure to the declining document business,” Moody’s said.

Though the union of Fujifilm and Xerox is predicted to “create synergies”, “it is uncertain if these synergies will be enough to overcome the decline in the office printing industry and to achieve long-term revenue growth,” Moody’s concluded.

 

 

 

 

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