Fujifilm Holdings is acquiring Xerox Corp. for $6.1 billion, and massive layoffs will likely be part of the deal -- assuming regulators and activist investors approve the buyout.
By combining businesses, Fujifilm and Xerox say they can deliver economies of scale, new R&D opportunities, and more efficiencies to address markets like inkjet printers, industrial print and workplace solutions. The combined company, with roughly $18 billion in revenues, will deliver at least $1.7 billion in total cost savings, with $1.2 billion to be achieved by 2020, Fujifilm and Xerox claim.
That's code for layoffs. Lots of them. Indeed, Fujifilm is cutting 10,000 jobs globally at its joint venture with Xerox, saying it needed to overhaul the photocopying business amid a tough market environment, Reuters notes.
The combined company will have dual headquarters in Norwalk, CT, U.S. and Minato, Tokyo, Japan, and will maintain the “Xerox” and “Fuji Xerox” brands within its respective operating regions, the companies said.
Remember Xerox PARC?
Sadly, the M&A announcement didn't even mention PARC -- short for Palo Alto Research Center Inc. Formerly known as Xerox PARC, the famed R&D facility helped to pioneer graphical user interfaces, the PC mouse, networking and other technologies that now surround us at work and at home.
At least symbolically, Xerox seems to have forgotten that R&D heritage -- even if many of those PARC developments didn't directly boost the company's bottom line in recent decades.
Revenue growth is particularly challenging these days. For its quarter ended December 31, Xerox revenues were nearly flat at $2.75 billion and the company had a net loss from continuing operations of $196 million. The company reportedly has been looking for a buyer in recent months, while activist investors like Carl Icahn have pushed for wholesale changes to Xerox's leadership and potential ownership.
Xerox Managed Print, Security Initiatives
Still, Xerox has shown progress in some areas -- particularly in the security and managed print services sector, where partners are increasingly focusing their efforts.
The proposed Fujifilm-Xerox business combination arrives amid massive consolidation in the hardware market, along with some potentially unconventional business combinations.
In a traditional deal, HP Inc. acquired Samsung's printer business in September 2016. And in an unconventional deal, Dell Technologies is said to be considering a reverse merger with VMware -- though VMware shareholder reaction to the rumor has been strongly negative this week.