Xerox, Japan's Fujifilm Agree To Combine Fuji Xerox JV With Xerox

(RTTNews) - While reporting its fourth-quarter financial results today, Xerox Corp. (XRX) provided its financial outlook for fiscal 2018. The company also announced a deal with Japan's Fujifilm Holdings Corp. (FUJIF.PK, FUJIY.PK) to combine Xerox and their longstanding Fuji Xerox joint venture.

The companies noted that the combined company will be a global leader in innovative print technologies and intelligent work solutions, with annual revenues of $18 billion and leadership positions in key geographic regions. The transaction is expected to close in the second half of calendar year 2018.

For fiscal 2018, Xerox forecast reported earnings from continuing operations of $2.30 to $2.50 per share and adjusted earnings per share of $3.50 to $3.70.

The company expects its full-year revenue trajectory to improve, declining 2 to 4 percent at constant currency. 2018 adjusted operating margin is expected by the company to expand and be in the range of 13 to 14 percent.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $3.52 per share for the year on revenues of $9.8 billion. Analysts' estimates typically exclude special items.

Xerox noted that the proposed combination with Fuji Xerox joint venture will 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. Xerox shareholders will own 49.9 percent of the combined company at closing.

Fujifilm will own 50.1 percent of the combined company, and provide important operational support as well as 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, Connecticut, U.S. and in Minato, Tokyo, Japan, with presence in over 180 countries. The combined company will go to market and maintain the "Xerox" and "Fuji Xerox" brands within its respective operating regions.

The companies expect the combination 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 percent of the total cost base of the new Fuji Xerox and will drive significant margin expansion over the next four years.

Upon close of the transaction, Jeff Jacobson, chief executive officer of Xerox, 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, chairman and chief executive officer of Fujifilm, will serve as chairman of the board.