Xerox, the brand that dominated the printing hardware market for decades to the point that it became a verb, has lost its independence and will now be managed by Japan’s Fujifilm Holdings Corp.
Per Bloomberg, Xerox and Fujifilm have agreed to a multi-part merger which will leave Fujifilm in control of the combined $18 billion successor company:
Xerox, which has a market value of $8.3 billion, will first merge with a joint venture the company operates with Fujifilm in Asia, according to a statement Wednesday. Current Xerox shareholders will receive a cash dividend of $9.80 per share. Tokyo-based Fujifilm will ultimately end up owning 50.1 percent of the combined entity, which expands the joint venture to encompass all of Xerox’s operations.
The agreement marks the end of independence for a U.S. company whose roots trace back to the start of the 20th century. Xerox became famous for its hardware — its copiers were so ubiquitous that the name Xerox became a verb — and it also invented an early graphic interface and mouse now so familiar with modern computers. But it fell on hard times as Canon Inc. and Asian competitors eroded its dominance while email and other forms of electronic communications took over.
According to Bloomberg, the end result is that Xerox and Fujifilm’s joint venture in Asia—which has gone on for 55 years—will continue, but shed 10,000 jobs due to what the latter company called an “increasingly severe” market environment. Fujifilm is allegedly looking to move away from the copier and printer market and transition to others that will survive long term, like managed-print services and medical imaging. According to Bloomberg Intelligence, that could potentially include things like “ultrasound and endoscope equipment.”
According to the New York Times, Xerox fell into something called a “competency trap.” Namely, it got so good at copy machines and printers it eventually fell short on its efforts to do anything else. In the 1970s it pioneered a then-novel type of mouse and graphical user interface-controlled computer called the Alto, but it fell flat when executives took over the project and tried to sell “Xerox Star” models priced at over $16,000. By the 1980s, the Times noted, its patents on copier technology began expiring and newer brands like Canon and Ricoh began to eat its lunch, inspiring a brief and ill-fated move into the financial services sector.
“Xerox is the poster child for monopoly technology businesses that cannot make the transition to a new generation of technology,” Harvard Business School’s David B. Yoffie told the paper.
“I am confident that Fujifilm’s ability to drive change as well as its experience of successful reinvention will give a competitive edge to the new Fuji Xerox,” Fujifilm chairman Shigetaka Komori told the Times in a statement, though his company revised its projects for revenue downwards by 30 percent in a forecast. Not all bad news, though: While Fujifilm’s stock plunged by 8 percent in Japan on Wednesday, Bloomberg wrote, the Times noted Xerox’s had risen some 12 percent “in anticipation of a deal” over the past month.