FUJIFILM Holdings Corporation
November 5, 2019

Kenji Sukeno
President and Chief Operating Officer

Notice of Acquisition of Fuji Xerox as a Wholly Owned
Subsidiary and Posting of Extraordinary Profit (Gain onSale of Shares of Subsidiary)
FUJIFILM Holdings Corporation (the “Company”) has today entered into an agreement (the“Agreement”) with Xerox Corporation (collectively with its subsidiaries, “Xerox”) under which theCompany will acquire Xerox’s 25% stake in Fuji Xerox Co., Ltd. (a consolidated subsidiary of theCompany; “Fuji Xerox”). The transactions envisaged under the Agreement have been approved bythe Boards of Directors of the Company and Xerox. This transaction will bring the Company’sownership of Fuji Xerox to 100%.
I.

Acquisition of Fuji Xerox as a wholly owned subsidiary

1.

Background and purpose

Founded in 1962, Fuji Xerox Co., Ltd. is a leading document solutions company and a 75% - 25%
joint venture between the Company and Xerox Corporation. Throughout its 57-year history, it has
provided office related products and solutions to increase productivity and has grown into a company
with revenues exceeding 1 trillion yen. It is also known as one of the most successful cross-borderjoint ventures between Japanese and non-Japanese companies.
Fuji Xerox operates in the Asia-Pacific market including Japan and has a strong customer baseamong large corporations and government offices. In addition, it has achieved a unique position in
the document industry by leveraging excellent product development capabilities and manufacturing
technology.
In the current situation where uncertainty about the future of the global economy is increasing andcompetition in the market is intensifying, the Company has decided it is best to have Fuji Xerox as awholly-owned subsidiary to strengthen the document solutions business and flexibly implement
necessary measures in a timely manner in order to achieve further growth.
With the execution of the Agreement, the joint venture agreement between the Company and Xerox
will be terminated, and Fuji Xerox will become a wholly owned subsidiary of the Company. Fuji
Xerox will continue to provide products to Xerox in the medium-to-long term, even after Fuji Xerox
becomes a wholly owned subsidiary of the Company, and has executed a new agreement with Xerox
that will enable it to expand its OEM opportunities in Europe and North America and worldwide.
Fuji Xerox will utilize its strengths in product development and manufacturing technology to supply
products such as printer engines as an OEM. Fuji Xerox will accelerate its development ofdigitalization solutions services utilizing cloud, AI and IoT technologies in areas adjacent to thedocument market. Furthermore, Fuji Xerox will accelerate its expansion into growth areas, including
producing revolutionary new products and services combining the Fujifilm Group’s image
processing technology with Fuji Xerox’s language processing technology for the medical andhealthcare industries.
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2.

Terms of the Agreement and outline of the transaction(1)

Terms of the Agreement

Under the Agreement between the Company and Xerox, the Fujifilm Group is to acquire Xerox’s
25% ownership stake in Fuji Xerox and a related interest (see Note 1) for USD 2.3 billion (JPY 253billion; see Note 2) in total.
The Company has agreed to withdraw the litigation that it filed against Xerox on June 18, 2018claiming damages caused by the unilateral cancellation of the definitive agreement between the twocompanies.
The Fujifilm Group’s payments will be funded from the Fujifilm Group’s cash and deposits in handand outside funding.

Note 1: Xerox’s 51% ownership interest in Xerox International Partners, a 51%-49% Joint Venture
between Xerox and Fuji Xerox that operates OEM business mainly in the U.S. and Europe
Note 2: As part of the execution of the Agreement, the Company conducted a valuation of Fuji
Xerox that takes into account the current market and economic conditions and the opinions of third
party organizations. The valuation in yen is based on an exchange rate of JPY 110 per USD.
(2)

Outline of the transaction(A) Fuji Xerox will conduct a buyback of its shares as treasury shares in accordance with therespective ownership percentages of the Company and Xerox and within the distributableamount.
(B)

After (A) has been completed, a company in the Fujifilm Group will acquire the remaining
shares of Fuji Xerox held by Xerox.

3.

Schedule(1) Date of resolution by Board ofNovember 5, 2019
Directors (of the Company)(2) Date of execution of agreement

November 5, 2019(3) Date of share acquisition

Scheduled within November 20194.

Effects of acquisition of Fuji Xerox as a wholly owned subsidiary

The Company anticipates the acquisition of Fuji Xerox as a wholly owned subsidiary to have thefollowing effects. Therefore, the Fujifilm Group will aim to achieve net sales of JPY 1.3 trillion in
the document solutions business in the 2024 fiscal year.
 By combining the Fujifilm Group’s strengths in image processing, graphics, and optics
technologies and Fuji Xerox’s strengths in language processing technologies and advanced
solutions expertise, the Fujifilm Group will be able to expand into growth areas, including
developing new IT solutions such as automatic generation of diagnostic reports in the medicalsegment.
 The Fujifilm Group will be better positioned to facilitate digitalization in the printing industry andoffer one-stop solutions covering analogue to digital by combining Fujifilm's graphic systems
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business, with its extensive client base in commercial and package printing, and Fuji Xerox’s
excellent sales, technological, and product creation capabilities in production business with strong
digital printing technologies.
 Business growth by expanding new OEM customers other than Xerox in the area of documents,
and accelerated expansion into document-adjacent fields through faster decision-making as awholly owned subsidiary (revenue target for 2024 fiscal year: JPY 150 billion).
 Fuji Xerox will continue to supply products to Xerox in the medium-to-long term.
 Cost synergies within the Fujifilm Group (including integration of duplicate middle/back-office
functions, consolidation of overseas operations, procurement optimization and infrastructure
sharing).
5.

Future growth strategy of FUJIFILM Holdings

To date, the Fujifilm Group has continued to grow by building a powerful business platform indiverse businesses including healthcare, highly functional materials and documents, as well as byachieving business portfolio transformation in existing businesses such as photography and digital
cameras by taking rapid and appropriate responses to sudden changes in market environments.
Acquiring Fuji Xerox as a wholly owned subsidiary will simultaneously achieve two of the focus
areas set out in the medium-term management plan VISION2019 – “further strengthening documentbusiness” and “realizing growth in healthcare and highly functional materials” – and maximize
shareholder value. It will also further ensure the Fujifilm Group’s continued investment in growthareas including healthcare and highly functional materials by enhancing the cashflow creation
capabilities of the document solutions business.
6.

Effect on results

If the transactions envisaged in the Agreement are completed, the results are expected to contribute
positively over the medium to long term to the consolidated results of the Company after Fuji Xerox
is made a wholly owned subsidiary.
Xerox’s non-controlling interest in the profit of Fuji Xerox will be absorbed into the net income
attributable to the Company’s shareholders by the acquisition of Fuji Xerox as a wholly owned
subsidiary, but the effect on performance is still being assessed. The Company will promptly
announce any revision to the financial forecasts for the fiscal year ended March 2020 that may
become necessary.
The Company will recognize a gain on sale of shares of Fuji Xerox in the non-consolidated financial
statements of the Company as stated in II. below, but such gain on sale will be eliminated in theconsolidated financial statements of the Company.
7.

Note regarding forward-looking statements

The results forecasts and other forward-looking statements contained herein are based on certain
assumptions judged to be reasonable and the information available to the Company. The Company
does not intend to make any promises with respect to the realization of those statements.
II.

Posting of extraordinary profit (gain on sale of shares of subsidiary)

As stated in “I.2.(2) Outline of the transaction” above, Fuji Xerox will buy back a part of theCompany’s stake in Fuji Xerox as treasury shares, and the Company will receive approximately JPY
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250 billion as consideration therefor. As a result, the Company expects to post approximately JPY
189 billion gain on sale of shares in its non-consolidated financial statements for the fiscal year
ended March 2020. Further, as stated in I.6 above, the gain on sale will be eliminated in theconsolidated financial statements of the Company.
Reference
1.

Outline of Fuji Xerox

(1)

Name

Fuji Xerox Co., Ltd.

(2)

Address

9-7-3 Akasaka, Minato-ku, Tokyo, Japan(3)

Name and position Shigetaka Komori, Chairman, Representative Director and CEOof representative
Kouichi Tamai, President and Representative Director(4)

Business activities

Office Products and Printer business, Production Services
business, and Solutions and Services business(5)

Stated capital

JPY 20 billion(6)

Dateincorporation(7)

Fiscal year end(8)Consolidated
assets(9)Consolidated total
JPY 930.3 billion (as of March 31, 2019)assets(10)

Ownership
structure2.

Outline of Xerox Corporation

(1)

Name

Xerox Corporation(2)

Address

201 Merritt 7, Norwalk, Connecticut(3)

Name and position Chief Executive Officerof representative
Giovanni (John) Visentin(4)Business activities

Printing devices and related services(5)

Stated capital

USD 232 million(6)

Dateincorporation(7)

Major shareholders
and shareholding Xerox Holdings Corporation
ratioofFebruary 20, 1962
Marchnet

JPY 664.1 billion (as of March 31, 2019)

FUJIFILM Holdings Corporation: 75%; Xerox Limited(consolidated subsidiary of Xerox Corporation): 25% (as ofNovember 5, 2019)ofApril 18, 1906

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100.0%

(8)Capitalrelationship

Through its consolidated subsidiary Xerox
Limited, Xerox Corporation holds 10,000,000
shares (25% of the issued shares and votingrights) of Fuji Xerox, which is a consolidated
subsidiary of the Company.

Relationship with Personnel
relationshiplisted company

CEO Giovanni (John) Visentin, President &COO Steven J. Bandrowczak, and Vice President
Xavier Heiss of Xerox Corporation concurrently
serve as directors of Fuji Xerox, which is aconsolidated subsidiary of the Company.

Fuji Xerox, which is a consolidated subsidiary ofthe Company, has entered into cross-license
Transactionalarrangements with Xerox Corporation regarding
relationshipxerography products and the technology andtrademarks, etc. relating to such products.
(9)

Consolidated management results and consolidated financial situation of Xerox
Corporation over the most recent three years
December 2016 (seeDecember 2017Note 1)

December 2018

Consolidated net assets

11,277

11,024

10,483

Consolidated total assets

18,051

15,946

14,874

Consolidated net assets per
51.0
share (see Note 2)

49.8

47.4

Consolidated net sales

10,2659,830

Consolidated
operating568
profit (see Note 3)

570

598

Net profit attributable to(471)
owners of the parent

195361

Consolidated net profit per(1.95)
share

0.71

1.40

Dividend per share

1.00

1.00

Fiscal year ended

10,771

1.24

Unit: USD (“Net assets per share,” “Net profit per share,” and “Dividend per share”)
Million USD (all other categories)
Note 1: Xerox conducted a spin-off in which its Business Process Outsourcing business was spun off
as Conduent (NYSE: CNDT) effective December 31, 2016. The figures for the Business Process
Outsourcing business are not included in the figures for the fiscal year ended December 2016.
Note 2: Calculated by dividing consolidated net assets by the total issued shares as of July 2019
(221,283,933 shares).
Note 3: Income Before Income Taxes and Equity Income.

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