"This transaction advances the historic relationship between our two companies and prepares us for a successful future in a fast changing industry", Jacobson said about the deal. The Company will hold 50.1% of the shares of New Fuji Xerox, and New Fuji Xerox will maintain its listing on the NYSE.
Xerox shares were up 3.3 percent to $33.75 in early trading in New York Wednesday.
Xerox has been under pressure from two of its biggest shareholders, Carl Icahn and Darwin Deason, who together own more than 15% of the company.
The original joint venture Fuji Xerox, which formed in 1962, made printers and copiers primarily in Asia and Australia.
Under the terms of the agreement, Xerox shareholders will receive a US$2.5bn (€2bn) special cash dividend, or approximately US$9.80 (€7.87) per share.
Japan's Line Corp said that it had entered an agreement with SoftBank Group Corp to give the telecoms and technology firm a majority stake in Line's mobile unit. It will be led by Xerox CEO Jeff Jacobson, while Fujifilm CEO Shigetaka Komori will serve as chairman.
Enhanced scale with presence in over 180 countries and covering key geographies including North America, Japan, Europe, Asia Pacific and China. Fuji Xerox is mainly engaged in business in Japan and the Asia Pacific region, while Xerox is mainly engaged in business in USA and Europe. The new company will accelerate revenue growth through its global reach and pursue developments in inkjet, imaging and artificial intelligence, it said.
As a first step, Fujifilm announced Wednesday that it will lay off 10,000 employees worldwide at the co-owned subsidiary. The stock's 12-month consensus price target had been $37.44 before the deal was announced. Xerox shares ended down 0.5 percent on Tuesday.