By Anthony Noto
Joint ventures don’t always work. It’s only a matter of time until one half of the partnership wants to cash in or gain control.
I spoke with the former Merrill Lynch analyst and current Training The Street CEO on why the Norwalk, Connecticut-based copier and printer manufacturer needs to merge with the JV company it created with Fujifilm Holdings Corp. more than 55 years ago.
In recent years, Xerox had lost its innovative stride, and shareholders had been clamoring for change. Also, Fujifilm touted a $22 billion valuation while Xerox (NYSE: XRX) — founded in 1906 in Rochester, New York — was hovering at $8 billion. One especially loud activist investor, Carl Icahn, called on Xerox to sever ties with Tokyo-based Fujifilm (OTC: FUJIF, FUJIY) completely.
While it’s unclear as to whether Icahn is completely happy with the Xerox announcement, Rostan expects the octogenarian will at least enjoy cashing in on his investment.
Read on to hear more of what Rostan thinks of the Xerox/Fujifilm JV and the pending merger agreement:
Why is a merger better for Xerox, instead of a JV?
Momentum and forces were moving against Xerox. The digitization and technology changes have been hard for the copier company to wrestle with, and an activist investor like Icahn publicly calling for a transaction. Put both of them together and a deal with Fujifilm may make the best sense for Xerox shareholders. Having the minority, 25 percent, stake in the existing JV means they don’t control their own destiny. Again pushing the company towards a monetization event.
What wasn’t working with this JV?