TOKYO -- Xerox plans to sell its products directly in the Asia-Pacific region when its partnership with a Fujifilm Holdings affiliate expires, seeking to cut ties with the Japanese company as the legal battle over an abandoned merger escalates.
When Xerox's technology agreement with joint venture Fuji Xerox expires in 2021, the American office machine maker intends to end their relationship and go it alone in Asia. Xerox sees "enormous potential growth opportunity" in selling "directly into the growing Asia-Pacific market" with "a more efficient, better managed supply chain than exists with Fuji Xerox," CEO John Visentin wrote in a letter sent Monday to Fujifilm Chairman Shigetaka Komori.
The Japanese tech company sued Xerox in the U.S. on June 18 for unilaterally canceling a month earlier an agreement reached in January to merge with Fuji Xerox, seeking over $1 billion in damages. Visentin's letter is the company's first public comment on the case.
"Chairman Komori-san," the letter started. It went on to say Fujifilm "has concealed from Xerox the true extent of a massive and ongoing accounting fraud at Fuji Xerox," claiming "multiple breaches" of provisions in the merger deal. The Japanese company "was and is completely incapable of consummating" transactions that would make it Xerox's de facto parent, according to the letter.
Fujifilm on Monday called Xerox's statements incorrect, claiming that all accounting issues had been resolved. Audits needed to integrate the companies' operations have been completed in all regions where they do business, with the expected results, according to Fujifilm. The company said it will continue to defend the validity of its actions in court.