Xerox and Fujifilm deal: a deeper look

No one knows exactly how this deal will shake out, but there’s
no shortage of opinions about it

On January 31, Xerox and Fujifilm announced that they’ll combine Xerox and their longstanding subsidiary, Fuji Xerox. Fujifilm will buy control of Xerox for about $6.1 billion and will name Jeff Jacobson, current Xerox CEO, to lead New Fuji Xerox. The combined company’s annual revenues should reach $18 billion. New Fuji Xerox will have “enhanced global scale and reach, world-class innovation capabilities, and an improved financial profile to support strategic investments in growth and attractive capital returns.” It’ll have dual headquarters in Norwalk, Connecticut, and Tokyo, Japan. Fuji Xerox mainly does business in Japan and Asia Pacific, while Xerox focuses in the U.S. and Europe.

That’s (apparently) the good news. The bad news is that several media outlets reported that about 10,000 employees could lose their jobs – and the $6.1 billion to buy control of Xerox was disputed at press time. Also, shareholders Carl Icahn and Darwin Deason, who hate the deal, were urging shareholders to reject it. Xerox subsequently hit back, calling their criticisms misleading and inaccurate. You may recall that it was Icahn and Deason, who together own a 15.2% stake in Xerox, previously demanded that the company be put up for sale. So it appears that what we have here is an exhausting, Trump-like back and forth – with one side saying it’s a key moment in the future of our industry, and others saying it’s a disaster. So who’s right?

The view from the experts

In cases like this, looking to independent third-party organizations delivers a clearer perspective. Here’s what marketing research firm InfoTrends-Keypoint Intelligence has to say:

“The re-alignment of the office and production printing industry continues. While some may view the timing of this decision to sell as defensive in nature, InfoTrends believes Xerox is making a smart move to combine assets with long-time partner Fuji Xerox under a strong parent company with deep financial and technology resources. Xerox and Fuji Xerox need to further drive down costs in the extremely competitive office technology market. Both companies also need to accelerate their product development to fully participate in the growing digital production printing industry (i.e. packaging, decorative, sign graphics and 3D).

The year 2018 will be another transition year for Xerox, but should allay any concerns customers or business partners may have about the long-term vitality of the company. We anticipate the organizational changes will move along quickly and that the combined company will soon begin to expand its product portfolio. Fujifilm has proven to be very astute over the last 15 years, as it navigated through the rapid demise of its traditional photographic film business by making investments in core technologies and selective acquisitions in graphics (Sericol, Dimatix) and medical/bio technologies (Sonosite, TeraMedica, Cellular Dynamics). The company now has control over a vast portfolio of patents and R&D labs, global distribution and field service, and strong brands and marketing operations – along with the financial resources to take a long view on markets and be opportunistic on acquisitions.”

The impact on printers

Bottom line: There’s no shortage of opinions. So here’s my 2¢ worth (haven’t quite reached the billionaire level yet). I feel sad that thousands may lose their jobs, but I do understand capitalism. However, my main worry is that by forming this even larger company, smaller customers may be under-serviced. Catering to these smaller businesses (who make up over 80% of our industry) at the individual level should never be taken for granted. Also, I’ll never understand why some folks place more trust in bottom-line billionaires (albeit highly successful ones) than in the experienced, caring people in this industry that have already raised the bar and moved it forward in countless amazing ways – on their own.

How many investors do you know that have actually sat down with a commercial printer and asked about his or her pain points? OEMs, suppliers and their reps do it constantly. Look, I understand that keeping investors and stakeholders happy is important – but so is listening to experts who already know more about this industry (and the people in it) than any money manager. Besides, suppliers have something that no capital investment firm will ever have – an actual physical product! That being said, I believe that investors, customers and our industry will, over time, look back on this as a positive move.


Tony Curcio is the editor of Graphic Arts Magazine.