It took less than a week into 2020 for more news regarding Xerox Corp. to develop from inside and outside its camp, involving both its ongoing quest to align with HP and its relationship with Fuji Xerox.
On Monday, Xerox Vice Chairman and CEO John Visentin sent a letter to HP’s board of directors, confirming it has obtained $24 billion in “binding financial commitments” from Citi, Mizuho and Bank of America to complete its “value-creating combination with HP.” In the letter, Visentin underscored that Xerox’s proposal was not subject to a financing contingency, but that Xerox had obtained the official commitment to allay HP’s fears.
Visentin also reiterated Xerox’s belief that the combined companies would deliver substantial synergies and “meaningfully enhanced cash flow” that could foster increased investments in innovation and drive greater returns for shareholders. He closed with another invitation to sit down at the negotiating table.
That letter apparently didn’t sit too well with HP, which fired back with its own missive two days later.
“We reiterate that the HP Board of Directors’ focus is on driving sustainable long-term value for HP shareholders,” stated the letter, signed by HP CEO Enrique Lores and Chairman Chip Bergh. “Your letter dated January 6, 2020 regarding financing does not address the key issue — that Xerox’s proposal significantly undervalues HP — and is not a basis for discussion.”
HP has repeatedly rejected the $22-per-share cash and stock offer not just on the financing concerns. Perhaps the bigger stumbling block, from HP’s perspective, is the impact that the outsized debt would have on the company combined stock. Still, Xerox continues to huddle with HP shareholders in an effort to have them pressure HP’s board into talks.
Fuji Xerox Won’t Renew Sales Partnership
On the other side of the globe, Nikkei Asian Review reported that Fuji Xerox informed Xerox that it does not plan to renew its ongoing sales partnership contract, which is slated to expire in March of 2021. The agreement between the companies provides for technology/brand licenses and sales territories applicable to each company. In addition, Fuji Xerox will change its name to FUJIFILM Business Innovation Corp. as of April 1, 2021.
After the agreement dissolves March 31 of next year, the new FUJIFILM Business Innovation will continue to provide Xerox with its products. However, whereas Fuji Xerox only sold in the Asia-Pacific region during the pact and Xerox sold into all others, FUJIFILM Business Innovation will branch into selling in other regions, including North America. Thus, the territory lines and restrictions will be erased.
Research firm IDC notes that the two companies boast a 16.6% global market share in A3 laser MFPs, with Xerox accounting for 7% of that figure. Now, FUJIFILM Business Innovation could theoretically partner with another manufacturer in North America, while Xerox can also throw its sales hat into the Asian market.
