Xerox Axes $6 Billion Fujifilm Sale, Shuffles Leadership

Roman Schwartz
May 14, 2018

In turn, Fujifilm intends "to challenge the unilateral decision of the Xerox". The settlement does resolve Deason's litigation against Xerox and its directors in terms of the proxy fight.

Xeroz has also reportedly appointed several new directors, said to provide Icahn greater control of the company. With that behind us and new shareholder-focused leadership in place, today marks a new beginning for Xerox.

Icahn has increased his activism over the past few months as he focuses his energies back on shaking up corporate targets after spending part of a year ago advising U.S. President Donald Trump on his regulatory agenda. That prompted Icahn and Deason, who between them own 15 percent of Xerox, to launch a proxy fight, arguing the transaction undervalued the US firm. In contrast to the investors' argument that Fujifilm is only offering $28 per share, analysts have said the Japanese firm's offer is not too far off that per share valuation, albeit not in cash. Xerox closed 2.9% higher at $30.17 on Friday in the USA for a market capitalization of $7.7 billion.

Icahn and Deason have said they believe other investors are "waiting in the wings" for Xerox, while people familiar with the matter have previously said that buyout firm Apollo GlobalManagement LLC has expressed interest in a bid for Xerox.

In the wake of the announcement of Xerox's takeover in January, Fujifilm announced a cost savings plan envisaging thousands of job cuts at Fuji Xerox. Nikkei earlier reported Fujifilm was expected to acquire the stake for as much as 70 billion yen ($640 million).

As previously reported, last year Fujifilm discovered accounting irregularities within two subsidiaries of its joint-venture Fuji Xerox Australia New Zealand operations.

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While a new order at Xerox could lead to the business seeking a higher purchase offer, Fujifilm said it will investigate the move and potentially seek damages.

A similar settlement with Icahn and Deason was announced in early May, but was scuttled a couple of days later when Xerox said certain legal stipulations were not meant. Fujifilm has said it's appealing a United States court injunction blocking the takeover.

"The transaction can not reasonably be expected to be completed under these circumstances, particularly given the court's injunction of the transaction and the lack of shareholder support for the transaction on current terms, as well as the unresolved accounting issues at Fuji Xerox", the company asserts in a statement.

Xerox said its new board would meet immediately and "begin a process to evaluate all strategic alternatives to maximize shareholder value".

"We do not believe that Xerox has a legal right to terminate our agreement".

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