Fuji Xerox president is confident that the break-up ‘will not happen’

“The 56-year-old joint venture will not be broken up,” said Fuji Xerox president Kouichi Tamai, even as the ongoing takeover tussles between Fujifilm and Xerox continue.

13 Jul 2018 | By Amogh Dikshit

Fuji Xerox manufacturing centre at Niigata, Japan

Xerox and Fujifilm are locked in a legal battle over the termination of their acquisition deal, which was agreed in January this year. The deal was called off in May as a direct result of interventions led by activist Xerox investors Carl Icahn and Darwin Deason. Fujifilm blasted the Xerox board for taking decisions "inconsistent with shareholder democracy" as the pair only had a 15% minority stake in Xerox.

A confident Tamai said it is not a feasible option for Xerox to split with Fujifilm as it may cost them a fortune. “The breakup will not happen because that wouldn’t make sense (for Xerox) in terms of the energy, money and time it would take to do so.”

Tamai warned Xerox that it would stand to lose $1 billion in revenue if Fuji Xerox was shuttered. “That would increase costs for Xerox. It is my responsibility to convince Xerox that it is cheaper and more reasonable to source products from us.”

The suit was filed with the federal court for the southern district of New York in Manhattan, US on 18 June. In the court papers, Fujifilm accused Xerox of breaking its agreement by making a unilateral decision to terminate the merger without “legitimate cause”.

In response, Xerox chief executive John Visentin wrote to Fujifilm chairman Shigetaka Komori on 25 June taking on the Japanese manufacturer for its legal action. Visentin suggested that Xerox may look to source its products from new vendor partners in the future, reducing its dependence on Fuji Xerox, and start selling directly into Fuji Xerox's Asia Pacific territories.

Fuji Xerox, 75% owned by Japan's Fujifilm and rest by Xerox, handles contracts that supply global clients with Xerox services in the United States and Europe, as well as Fuji Xerox services in Asia.