FUJIY FUJIFILM Holdings Corporation (PK)

By Megumi Fujikawa 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 6, 2019).

TOKYO -- Fujifilm Holdings Corp.'s chairman and chief executive said he didn't have hard feelings after he abandoned his bid for U.S. corporate icon Xerox Holdings Corp., describing a revised deal as a chance to grow.

"Honestly, this agreement is better," said Shigetaka Komori, the longtime leader of Fujifilm.

The companies concluded nearly two years of mudslinging with a deal Tuesday that will give the Japanese camera and office-equipment maker 100% control of its joint venture with Xerox. The joint venture, called Fuji Xerox, was created in 1962 to supply copy machines in Japan and elsewhere in the Asia-Pacific region.

Xerox will get $2.3 billion and give up its 25% stake in Fuji Xerox.

"There are no hard feelings. We came up with this conclusion, thinking in a businesslike manner," Mr. Komori said. He said the deal was beneficial because Fuji Xerox, now under the Tokyo company's full control, will be able to supply its machines to other brand-name copier makers around the globe instead of just Xerox.

Fujifilm will continue to supply its machines to Xerox for now, but Mr. Komori said the company wouldn't consider a merger with the U.S. company in the future. Fuji Xerox's use of the Xerox brand name is governed by a technology agreement with the U.S. company that expires in March 2021.

Fujifilm and Xerox agreed to merge in January 2018 after Fujifilm was approached by Xerox, according to Mr. Komori. The deal fell apart after two of Xerox's biggest shareholders -- activist investors Carl Icahn and Darwin Deason -- argued it undervalued Xerox. That prompted Xerox to walk away, and the two men won control of Xerox's board.

Investors in Fujifilm welcomed Tuesday's settlement, in which Fujifilm agreed to drop a lawsuit seeking to force Xerox to go through with the original merger deal. Fujifilm shares closed 6.7% higher in Tokyo trading Tuesday.

Rakuten Securities strategist Masayuki Kubota said the settlement came as a relief to Fujifilm investors because acquiring Xerox would have been money-losing.

The office equipment business is still growing in Asia's emerging economies, but the market is shrinking in the U.S., Mr. Kubota said. "If Fujifilm invested in the U.S., it could have ruined its efforts to reform its business structure and focus on more-promising medical and pharmaceutical sectors," he said.

With the decline of photo film, Fujifilm has been stressing its medical business. Still, office equipment remains a cash generator and accounts for about 40% of Fujifilm Holdings' roughly $22 billion total revenue.

Corrections & Amplifications Fujifilm Holdings Corp. abandoned its bid for Xerox Holdings Corp. An earlier version of this article misspelled the company's name as Zerox in the headline. (Nov. 5, 2019)

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

November 06, 2019 02:47 ET (07:47 GMT)

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