Reports indicate that U.S. document pioneer Xerox is in discussions with Fujifilm Holdings Corp with a view to striking a major deal. The two already operate a joint venture and the talks are aimed at considering possible deals which could lead to a change of guard at Xerox. According to sources a complete takeover of Xerox isn’t being looked into though.
In the event that there is a change of guard at the document pioneer, it would be the end of Xerox’s independence following its woes resulting from a fall in office printing demand. According to sources the deal would allow both companies to cuts costs and increase the efficiency of their businesses.
Decrease in revenues
In the late 1990s the shares of Xerox had reached a high of over $150 but are now trading a little over $30 due to a fall in revenues as well as profit. While the market capitalization of Xerox is currently around $7.7 billion, the company owes over $4 billion in net debt.
Xerox is at the moment facing a fight with Carl Icahn, an activist investor, over the company’s board and chief executive officer Jeff Jacobson. Icahn, who is the largest shareholder of the document pioneer with a 9.7% interest wants more board seats.
Per Icahn, Xerox stands the risk of falling behind despite the amount of investments it has made in research and development over the years. Icahn is of the view that Xerox could turn out to be another Eastman Kodak which six years ago filed for bankruptcy. Eastman Kodak was to re-emerge one year later after disposing of assets and divesting from unprofitable business lines.
Photography paper maker
Founded more than a century ago in Rochester, New York, as a photography paper maker, Xerox was to later develop a photocopying machine before publicly listing on the NYSE. The joint venture between Xerox and Fujifilm, Fuji Xerox, was formed more than five decades ago and involves selling printers and copiers in the APAC (Asia-Pacific) region. Fujifilm is the majority shareholder of Fuji Xerox with its stake being 75%. Annual sales of Fuji Xerox are approximately $10 billion.
Xerox was once dominant in the copier market though competition from Japan challenged its dominance. It was also at one point forced by antitrust regulators in the United States to license its portfolio of patents. The rise of desktop printers and email completely upended its market resulting in a couple of painful restructurings.