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Xerox sells portion of Fuji venture for $1.3 billion

Looking to pay down debt and regain momentum lost to increased competition, Xerox agrees to sell half of its stake in Fuji Xerox to partner Fuji Film.

    Looking to pay down debt and regain momentum lost to increased competition, Xerox on Tuesday agreed to sell half of its stake in Fuji Xerox to partner Fuji Film for about $1.3 billion (160 billion yen).

    Under the terms of the agreement, Fuji Film's interest in Fuji Xerox increases from 50 percent to 75 percent, and Xerox holds the remaining 25 percent, retaining the rights of a minority shareholder, the company said in a statement.

    The sale is the latest move by Xerox in a three-pronged turnaround plan announced in October, through which it would sell as much as $4 billion in assets to repay debt. It sold its China operation to Fuji Xerox in December for $550 million.

    "With this transaction, Xerox...enhances its liquidity and has made significant progress on its turnaround pledge to generate more than $2 billion in asset sales," said Paul Allaire, Xerox's chief executive.

    The Stamford, Conn.-based company has fallen on hard times in a struggle to meet increased competition from rivals Hewlett-Packard and Canon. After it reported declining sales and a fourth-quarter loss in January, the copier company said it would cut 4,000 jobs in the first quarter and lay off more workers--to a total of as much as 10,000--later in the year.

    As part of Tuesday's agreement, all product and technology agreements between Xerox and Fuji Xerox will continue. Fuji Xerox will also continue to provide color office, publishing and solid ink product technology to Xerox and work with Xerox on research and development.

    The agreement is expected to result in an after-tax gain of about $310 million and to close by the end of March, subject to Japanese regulatory approval.