FUJIFILM and Xerox ink agreement to merge Fuji Xerox Joint Venture with Xerox

FUJIFILM Holdings Corporation (“Fujifilm”) and Xerox Corporation (“Xerox”) have entered into a definitive agreement to combine Xerox and their longstanding Fuji Xerox joint venture. The combined company will be a leader in innovative print technologies and intelligent work solutions with annual revenues of $18 billion and leadership positions in the key geographic regions.

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 share, 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 & Chief Executive Officer, 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.”

Jeff Jacobson, Chief Executive Officer, 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.”

Clear Leader in Innovative Print Technologies and Intelligent Work Solutions

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.

• Innovation capabilities to define the future of innovative print technologies and intelligent work solutions by 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.

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.