(Adds details on quarter, estimates, background)
July 26 (Reuters) - Xerox Corp, which scrapped a planned $6.1 billion merger with Fujifilm Holdings Corp , reported a quarterly profit that was below Wall Street estimates as it posted higher costs related to the failed deal with the Japanese company.
Xerox, which has been exploring options including a sale of the company, was sued by Fujifilm for over $1 billion, seeking punitive damages and a $183 million merger termination fee.
The merger was announced in January and abandoned on May 13 when Xerox, in a settlement with shareholders Carl Icahn and Darwin Deason, agreed to install new directors and replace the chief executive officer with Icahn-backed John Visentin.
Xerox also threatened to end its technology agreement with the 56-year-old joint venture Fuji Xerox, and said it would start sourcing products from new vendors to lower its dependency on Fujifilm. In response, the Japanese firm said it was ready to compete against Xerox in Asia-Pacific and challenge it in America and Europe if it failed to renew its agreement in 2021.
Fuji Xerox, 75 percent owned by Japan's Fujifilm and the rest by Xerox, handles contracts that supply global clients with Xerox services in the United States and Europe, as well as Fuji Xerox services in Asia.
Net income attributable to Xerox fell to $112 million, or 42 cents per share, in the second quarter ended June 30, from $166 million, or 63 cents per share, a year earlier. The profit in the latest quarter was hurt by transaction costs of $58 million.
Excluding items, the Norwalk, Connecticut-based company reported earnings of 80 cents per share, missing the average analyst estimate of 83 cents, according to Thomson Reuters I/B/E/S.
Total revenue fell 2.2 percent to $2.51 billion, but topped the analysts' estimate of $2.49 billion.
The company also said it will repurchase up to $500 million worth of shares in 2018. (Reporting by Sonam Rai in Bengaluru; Editing by Bernard Orr)