Fujifilm Holdings Corp. said Wednesday it will acquire a 50.1 percent stake in Xerox Corp. of the United States and merge with its copy machine subsidiary Fuji Xerox Co. with the aim of improving profitability amid sluggish business environment in the copier industry.
Fujifilm Holdings also said that it will slash 10,000 jobs at Fuji Xerox, more than half of which will be workers based overseas.
The merger will enable Fujifilm "to formulate a consistent global and management strategy," Chairman Shigetaka Komori said at a press conference.
The name of the new company will be "Fuji Xerox," with the merger expected to be carried out in the July-September quarter of 2018. Komori will be named chairman of board while Xerox chief executive officer Jeff Jacobson will assume the post of CEO.
The Japanese company currently holds a 75 percent stake in Fuji Xerox with Xerox Corp. owning the rest.
As Fujifilm will acquire Xerox shares by using the Fuji Xerox company value, it will not make any capital contributions. With Xerox already listed on the New York Stock Exchange, the new company is entitled to become a public firm.
Through the merger, Fujifilm is eyeing to carry out a fundamental structural reform.
Fujifilm, once a major photographic film company, has largely shifted its operations to medical equipment and drugs as the film market has been shrinking with the emergence of digital cameras.
The company continues to focus on the medical area, increasing its investment in the area of regenerative medicine.
Fuji Xerox, a joint venture with Xerox, operates office equipment businesses in Japan and other Asian markets.
But as the market has matured, its profitability has started to decline with Xerox hit even harder amid a paperless movement in its key U.S. and European markets.
Fujifilm on the same day cut its group operating profit outlook for the year ending in March to 130 billion yen ($1.2 billion), down from its earlier forecast of 185 billion yen, citing 49 billion yen in losses incurred due to the restructuring of Fuji Xerox and other reasons.
For the whole of fiscal 2017, Fujifilm revised upward its group net profit to a record 140 billion yen from the previous forecast of 125 billion yen, citing the sale of a portion of its stockholdings.
The company expects the cost of restructuring in the three years from fiscal 2017 to total 72 billion yen.