The agreement will see Fujifilm withdraw a lawsuit it filed against Xerox in 2018 seeking more than US$1 billion in damages after a merger between the two firms was scrapped, the Japanese firm said.

Under the transaction announced Tuesday, Fujifilm will acquire the 25% stake in Fuji Xerox owned by Xerox. The deal gives Fujifilm a 100% stake in the firm.

The deal was unanimously approved by the boards of both companies, Fujifilm said.

“Fuji Xerox will operate as a wholly owned subsidiary of Fujifilm and will continue to supply to Xerox after completion of the transaction,” it said.

“Fuji Xerox has now become a lean and strong company after a series of reforms we started in 2018, and I am confident that with this initiative it will be even stronger,” Shigetaka Komori, Chairman and Chief Executive Officer of Fujifilm, said in a statement.

He said full ownership of the firm would “facilitate faster decision making in a rapidly changing business environment”.

The decision comes after a contentious period for the two firms after a merger between them failed following a lawsuit by powerful investors Carl Icahn and Darwin Deason, who own more than 15% of Xerox and opposed the tie-up.

After the merger was shelved, Fujifilm sued Xerox seeking damages of more than US$1 billion and continuing to push for the tie-up to go ahead.