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FujiXerox marriage annulled - Xerox woos HP Inc.

12 November 2019

Two major announcements regarding Xerox Corporation this week, both very positive, which will redefine Xerox for years to come.  
 
Xerox Corporation are withdrawing from their 57-year old joint venture with Fujifilm - who manufacture all the Xerox office printers and multifunctions - and both sides have agreed to "move on."  
Within hours of this announcement, the Xerox checkbook was out and they made a bid for HP Inc.
 
Xerox are selling their 25 % stake in Fuji Xerox Co., Ltd. and their 51 % stake in Xerox International Partners (XIP), an OEM joint venture between Xerox and Fuji Xerox.  Fuji Xerox will continue to operate as a wholly-owned subsidiary of Fujifilm.  Fujifilm will still OEM their engines to XIPs and others, but to what extent Xerox office machines will continue to run on Fujifilm print engines remains to be seen.  It seems very likely that this will decline.  On the other hand, as sole master of FujiXerox, Fujifilm will be free to OEM their print engines much more widely.  There's one more thing: Fujifilm have dismissed their billion dollar lawsuit against Xerox Corporation.
 
These agreements reset our relationship with FUJIFILM and provide both companies with tremendous opportunities to grow, together and independently,” said John Visentin, vice chairman and CEO of Xerox. “These agreements also unlock significant unrealized value for our shareholders, provide greater clarity for our customers and help us speed our transformation to a digital-first company.”
 
On Tuesday November 5 The Wall Street Journal reported that Xerox had offered $27 billion for HP Inc., and HP Inc. confirmed that they "had conversations with Xerox Holdings Corporation from time to time about a potential business combination."  
 
The massive digital capital HP Inc. has would rocket Xerox’s "transformation to a digital-first company."  Xerox Concessions would gain the credibility and the hardware catalog to become real IT suppliers.  The printer fit seems quite good too.  From cheap personal printing through office and wide format, right up to high-end digital production, there are remarkably few market segments in which both HP and Xerox are strong and compete head to head.  Their sales approaches are diametrically different, but not opposed.  Xerox has its territorial concessions all over the world, and HP Inc, of all the manufacturing printer brands, is succeeding best through the indirect and internet channels.  Their sales strategies need neither compete nor change; they can complement each other.  
 
Xerox resellers have been dismayed for some years by the quarreling between the corporation and its office OEM.  Years go by without product renewals.  It remains to be seen how much of a Xerox Corp / HP Inc "business combination" there will be, and how much transaction there may be.  It seems unlikely, even now, that Xerox could muster the capital to buy HP Inc outright, the former being valued at $8 billion, and the latter $29 billion.  However, it does seem clear that Xerox will be changing OEM from Fuji to HP Inc. at least in the office markets - and some Xerox execs will be going back to Palo Alto before the winter sets in up in New England. 

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