Fujifilm Buys Xerox Or Will Sue Court

- May 23, 2018-

Fujifilm buys Xerox or will sue court

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On May 13th, the US office equipment giant Xerox announced the abolition of the latter’s acquisition of Xerox’s plan with Japan’s Fujifilm Holdings, which may become obsolete.

On the same day, Xerox reached a settlement with two major shareholders, including the famous anti-acquisition investor Carl Icahn, and Chief Executive Officer (CEO) Jeff Jacobson and five other directors had announced the acquisition. resignation. The majority shareholders and the famous investor Carl Icahn, who opposes the acquisition, will allow five people to enter the Xerox board and hold more than half of the voting rights. Xerox's management will usher in a big shake-up.

Regarding Xerox's abolition of the acquisition plan, Fujifilm issued a comment on the 14th, saying that “Xerox has no right to terminate the contract. Including lawsuits and claims, it will take appropriate measures.” Fujifilm said it will also require the new management to continue its acquisition plan, but It is expected that no consent will be given. If the courtroom situation continues, it will take time to resolve the problem.

In the past, the two big brothers of the separatist side and the two rivals intended to integrate and reorganize first, and then stopped the acquisition. It was also reconciliation. It was also a court of law. It was very lively and lively. There was a staged acquisition of soap operas, and how the story was ups and downs? We look at the timeline a little bit.


Fujifilm Takes $6.1 Billion to Purchase Xerox and Cancels 10,000 Positions

Time to return to Beijing on February 1st, Japan Fujifilm Holdings Co., Ltd. announced on Wednesday that it will acquire a majority stake in Xerox Corporation for US$6.1 billion, and will merge this American company into existing joint ventures of both parties to expand the scale. And cut costs to address the market environment where office printing business demand is falling.

The process of this transaction is: Fuji Xerox (Asia Pacific) repurchased 75% of the shares from Fujifilm for US$6.1 billion, and Fujifilm used this amount to purchase Xerox's majority stake (50.1%). The entire transaction will be completed in the second half of 2018.

The merged company will retain the name of "Fuji Xerox" and will become a subsidiary of Fuji Film, with a headquarters in the United States and Japan, and will be listed in New York. The CEO of the combined company will be Jeff Jacobson, current CEO of Xerox, and Fujifilm CEO Goosen Long will serve as chairman.

At the same time, 10,000 jobs were abolished in the joint venture and they said that they would reorganize the photocopying business in a difficult market environment.

Fujifilm said it will provide a restructuring charge of 49 billion yen (4.5095 billion U.S. dollars) in its fiscal year plan, and cut its operating profit forecast for the year to 1300 billion yen from the previous estimate of 185 billion yen. The company said that from the year ending in March 2020, the restructuring will save the company 50 billion yen annually.

Why reorganization?

It is understood that with the declining demand for printing services, the sales growth of Fujifilm and Xerox print and copy products has been slow. The reason is that more and more companies have turned to paperless office.

According to Fujifilm's 2017 financial report, its operating profit for its file-processing business (including Fuji Xerox) fell by 29.4% in the third fiscal quarter, which was inferior to the imaging and information departments. Overall, the company’s operating profit rose 3.4% in the third quarter.

Xerox has been working hard to expand its documentation technology and related businesses for the past four years, and its 2017 revenue (1.03 billion US dollars) has fallen by 19% from 2014 (12.7 billion US dollars). According to Xerox’s financial report, the company’s net loss from continuing operations in the fourth quarter was US$196 million, mainly because the US tax reform bill brought a one-time fee of US$400 million, but it also reflected the The steady decline in print business.

Due to poor Xerox performance, Karl Icahn, owner of about 9.7% of Xerox Co., and Darwin Dison, the company's shareholder, pressed Xerox to force the company to explore strategic options; expel the company’s internal “conservatives”. , Including the CEO, etc.; and asked the company to negotiate a joint venture agreement with Fujifilm for several decades, with a view to achieving better terms.

Both companies are optimistic about the acquisition

At the beginning of the acquisition, both companies were optimistic and positive about the acquisition.

The two companies stated that the merger of R&D, procurement and other businesses will enable Fuji Xerox, its new joint venture, to save at least US$1.7 billion in total costs by 2022. In Fujifilm's overall sales and operating profits, the joint venture will account for nearly half of the total. The new Fuji Xerox will better compete in today's environment with a truly global scale, fast-growing markets and innovative capabilities to effectively meet the rapidly growing needs of its customers.

“This is a quick decision, but I think it is also a creative decision.” Fujifilm CEO Goosen Takashi said this acquisition, “The new company structure will take advantage of the strengths of our three companies.”

Xerox CEO Jeff Jacobson also expressed optimism that the combined company will be able to gain greater advantages in new technologies, its revenue will also increase, and it will be able to achieve cost synergy; at the same time, Xerox The shareholders will also benefit from a $2.5 billion special cash dividend from the transaction.

In addition, Jeff Jacobson stated in a pre-recorded video message that the merger will bring significant benefits to shareholders including the existing shareholders of Xerox and Fujifilm. Will hold a stock of a more competitive company, such a company will have the ability to seek long-term growth opportunities and increase profitability.

New York Court Suspends Fujifilm's Acquisition of Xerox

When everyone thought that all acquisitions would proceed in an orderly manner, an accident occurred.

On April 27, the Supreme Court of New York State ordered Xerox to suspend the related procedures for Fujifilm Holdings’ purchase of the US office equipment giant Xerox. The court found that there was a problem with the Xerox acquisition.

After Fujifilm agreed with Xerox, Carl Icahn and others strongly objected to Fujifilm's lack of funds to control Xerox's franchise, saying that it "to underestimate the value of Xerox." After February, Xerox's shareholder, Darwin Disson, demanded that the acquisition be halted and filed multiple lawsuits with the court.

According to reports in the U.S. media, the court held that Xerox CEO Jeff Jacobson accepted the Fujifilm proposal's judgment and the board's supervisory system had problems. Darwin Dyson asked to replace Xerox's directors and the court requested that the candidate be filed within 30 days.

Xerox and Icahn and others announced on May 1 that they had reached a settlement but the settlement failed on the 3rd. Xerox appealed on the 4th provisional processing decision, which was repealed shortly after reconvening the route with Fujifilm.

Everyone must have noticed that it was no drama that stopped the acquisition of Karl Icahn and Darwin Deison, who had previously strongly supported the sale of Xerox.

After twists and turns, Xerox abolished the agreement with Fujifilm

On May 13th, Xerox announced that it had repealed the latter’s acquisition of Xerox’s plan with Fujifilm Holdings, which may be void. Xerox considers a major shake-up of the management layer to study alternatives to the acquisition.

At the same time, Xerox reconciled with the major shareholders who opposed the acquisition. Jeff Jacobson, CEO of Xerox, who has been promoting the acquisition plan, resigned, and the majority shareholder who opposes the acquisition, the famous investor Carl Icahn, will appoint management.

Xerox said that its CEO Jeff Jacobson has resigned and is expected to be replaced by John Vicenten. Xerox also replaced five board members as part of a broader reorganization. The company earlier revealed this month that it plans to replace the CEO and restructure the board.

Carl Icahn stated in a statement: “We are very happy that Xerox has finally terminated the unwise plan to sell company controlling rights to Fujifilm. We often say that the most important person in a company (so far) is the CEO. Therefore, we are also happy that John Vicenten, an experienced veteran in this field, will take over Xerox."

According to another report, Xerox may now appear to be bidding for sale. The Xerox statement stated that the new board will immediately meet and begin to evaluate all strategic options in order to maximize shareholder value.

Fujifilm claims Xerox does not have the right to terminate M & A transactions Consider taking legal action

On May 14, according to foreign media reports, Fujifilm stated that it will consider taking legal action against Xerox.

Fujifilm said in the announcement that Xerox does not have the right to terminate the agreement between the parties and is evaluating all possible options, including taking legal actions to seek compensation. The company also stated that Xerox’s decision was “unilateral”.

In addition, Fujifilm said it will also require the new management to continue its acquisition plan. However, at present, the prospects for resolving the issue are not optimistic. It is not easy to raise new proposals for the purchase price per share according to the demands of Xerox's major shareholders.

Prior to this, Carl Icahn and others have consistently stated that if Fujifilm raises Xerox’s purchase price per share to more than US$40, it will explore the acquisition proposal. However, Fujifilm has been making every effort to develop its business in the medical field and has no spare capacity to allocate huge amounts of money to its office equipment business. If the acquisition plan is abolished, Fujifilm will have to reformulate its countermeasures.


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