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Fujifilm's Komori gives Xerox 'six months' to decide on takeover

Japanese company believes $8.6bn offer was fair

Fujifilm Chairman and CEO Shigetaka Komori speaks to reporters in Tokyo on June 7. (Photo by Keiichiro Sato)

TOKYO -- Fujifilm Holdings still believes that its takeover offer for Xerox is the U.S. office equipment maker's best hope for survival in a fiercely competitive global market, but the company is preparing in case the deal falls through, Fujifilm CEO Shigetaka Komori said in an interview with Nikkei on Thursday.

"When I thought of the best way to maximize the corporate value of Xerox, the takeover was the only choice, and I still think this plan is the one and only way," Komori stressed. "[But] I'm not going to wait forever," Komori said, adding "I don't have a specific deadline in mind, but it should normally be around six months."

In January, Xerox and Fujifilm had agreed to a complex deal to fold Xerox into their 56-year-old Asian joint venture Fuji Xerox and give Fujifilm control. The plan was rejected in mid-May due to strong opposition from activist investors  Carl Icahn and Darwin Deason.

Fujifilm doubts that Xerox can stay in business without the synergies their joint venture offers. Xerox's products are mostly developed and manufactured by Fuji Xerox. Xerox could try to dissolve the partnership and find another supplier, but Fujifilm believes finding such a deal on short notice at a reasonable price is unrealistic.

The Japanese company said the buyout would save $1.25 billion in costs by streamlining operations and decision-making.

A U.S. court has issued a temporary injunction blocking the merger to give time for the proposal to be presented to shareholders at Xerox's general meeting. Fujifilm said it has already filed an appeal seeking to lift the injunction. "We have signed the agreement with Xerox through a proper legal process," said Komori. "We will keep pushing Xerox to fulfill what's included in the agreement."

The main objection the activists had was that the offer by Fujifilm undervalued Xerox. The market capitalization of Xerox was $7.9 billion at the time of Fujifilm's $8.6 billion offer. Fujifilm intends to pay a total of $2.5 billion in special dividends.

"The current shareholders will be able to enjoy a share price reflecting the synergy of the merger," said Komori, suggesting that he is not interested in raising the offer. The activists hold about 15% of Xerox at the moment. "It is up to other 85% of shareholders to decide," said the CEO, hinting he believes they will take the offer.

Masayuki Yuda contributed to this article.

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