Xerox drawn into duplicative Japanese fight

A man walks past a Canon logo in Tokyo, Japan, October 27, 2015. REUTERS/Toru Hanai

MELBOURNE (Reuters Breakingviews) - A company synonymous with copying should expect some duplication. Xerox has become aggressive since pushy investor Carl Icahn arrived on the scene. After rancorously blowing up a deal and ending a 57-year joint venture with Japan’s Fujifilm, the U.S. printer maker initiated a hostile $35 billion bid for rival HP. Now a longtime partner of HP’s is threatening to break ties if the takeover is successful.

HP has been resisting the advances of its smaller competitor. Rushing to Chairman Chip Bergh’s side is the boss of one of the company’s largest suppliers of laser-printer components: Canon.

It was Icahn, and the Xerox boss he installed, John Visentin, who helped torpedo a $6.1 billion sale to Fujifilm two years ago. The transaction was controversial, but things got nasty. When Fujifilm sued Xerox for abandoning the merger, Visentin responded with an ornery letter to his counterpart, Shigetaka Komori, calling it a “desperate, misguided negotiating ploy.” The two companies eventually unwound a decades-long alliance, with Fujifilm buying Xerox’s 25% stake last November for $2.3 billion.

As HP rejected Xerox’s tender offer last week, Canon CEO Fujio Mitarai told Nikkei he is prepared to tear up his company’s storied association with HP if Xerox becomes the new owner. That’s a remarkable declaration considering that in 2018 HP accounted for nearly 14% of Canon’s $38 billion of revenue, which has been falling. The company’s shareholders weren’t obviously spooked, but the provocation is nevertheless telling.

The HP-Canon bond is the stuff of business lore. An account in the 2008 management book “The Power of Two” says the unwritten rule at HP was that “if you screw up the relationship with Canon, you will get fired.” Eight years later, when HP bought Samsung Electronics’ printer business, comments from Mitarai were included in the press release, signalling the importance of HP’s now 35-year link with Canon.

Maybe threatening to throw all that away is just a tactic to preserve an arrangement that’s advantageous to Canon. It could also, however, reflect a distaste for the kind of distracting, public spat that Xerox had with Fujifilm. Whether Xerox likes it or not – and whether there is a cheaper vendor to be found – strong relationships matter in corporate Japan and beyond. It should be little surprise that hard-nosed tactics invite copycat responses.

Corrects Canon chief executive’s name to Mitarai throughout and HP job title to chairman in second paragraph.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.