Xerox Corp (NYSE:XRX), for decades the name synonymous with photocopying, is to become part of Japanese company Fujifilm Holdings Corp.
Xerox shareholders will receive a US$2.5bn special cash dividend, worth around US$9.80 a share, and will end up with 49.9% of the combined company, in a merger that cements commercial relationships between the two document imaging companies.
READ: Xerox shares soar in premarket on Fujifilm deal rumours
The combined company will be known as Fuji Xerox and will be listed on the New York Stock Exchange.
Shares in Xerox were up 2.5% in pre-market trading on Wednesday.
“Fujifilm and Xerox have fostered an exceptional partnership through our existing Fuji Xerox joint venture, and this transaction is a strategic evolution of our alliance," said Shigetaka Komori, the chairman and chief executive of Fujifilm said in a statement.
Merger has "compelling industrial logic"
“The Document Solutions business represents a significant part of Fujifilm’s portfolio, and the creation of the new Fuji Xerox allows us to more directly establish a leadership position in a fast-changing market. We believe Fujifilm’s track record of advancing technology in innovative imaging and information solutions – especially in inkjet, imaging, and AI areas – will be important components of the success of the new Fuji Xerox,” he added.
The merger is backed by the boards of both companies.
Xerox's chief executive, Jeff Jacobson, said the proposed combination has “compelling industrial logic”.
The combined group is targeting at least US$1.7bn in annual cost savings by 2022, with US$1.2bn of those savings expected to be in the bag by 2020.