Investor Victory as Xerox CEO Quits

It’s curtains for Xerox CEO Jeff Jacobson as he and six board members buckle under pressure from activist investors. 

The resignations are the latest victory for outspoken Xerox shareholders Carl Icahn and Darwin Deason, who last week managed to temporarily halt the company’s planned merger with Japanese imaging giant Fujifilm after a US judge ruled in their favour.

Deason and Icahn filed a lawsuit with the US Supreme Court back in February in an attempt to stop the $6 billion deal, which they said was unfairly weighted to Fujifilm. They also alleged that Jacobson and other board members had acted in ‘bad faith’, attacking the CEO in particular over his involvement in negotiations with Fujifilm despite the advice of Xerox shareholders.

The judge found sufficient evidence to believe Jacobson had indeed entered into talks with Fujifilm in order to preserve his own job. The court imposed a temporary injunction to stop the merger, which also reopened nominations to the Xerox board.

Now, according to a statement from Xerox, the resignations are part of an agreement with Deason and Icahn.

Xerox said: “The board considered the significant risk and uncertainty of a prolonged litigation […]. As a result, the Xerox board of directors determined that an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders.”

Among the casualties is Chairman Robert Keegan, who is expected to be replaced by Keith Cozza, CEO of Icahn Enterprises.

Meanwhile, John Visentin – another of the investor pair’s nominations – looks set to be appointed to replace Jacobson. Visentin is an IT industry veteran, having recently held senior executive positions at tech giants HP and IBM. In a letter to shareholders in March, Icahn introduced him as a consultant to explore strategic alternatives for Xerox on behalf of fellow investors.

In Wednesday’s statement, Deason said: “The future for Xerox is extremely bright. With John Visentin at the helm, receiving support and guidance from Carl Icahn and me, I am confident the alternatives for Xerox and its shareholders will be fully and expeditiously maximized. John is the right leader at the right time for Xerox.”

Reacting to the settlement, Icahn compared Jacobson’s behavior over the past year to Netflix series House of Cards, adding: “With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm.”

Xerox went on to say that the new board would meet immediately to discuss strategic alternatives. It is also required to hold its AGM within the next four months.

According to a court filing, the settlement must still be approved by a New York judge.

With the Fuji Xerox deal at serious risk, Fujifilm has since threatened to file an objection with the US courts and is going to appeal last week’s injunction.

The response read: “We have serious concerns about the announced settlement and we intend to file our objections with the court shortly. We believe the combination of Xerox and Fuji Xerox is the best option to provide exceptional value to shareholders of both companies.” - (OPI)