Xerox throws out Fujifilm Merger

Xerox throws out Fujifilm Merger

Xerox has terminated the agreed takeover deal with Japanese imaging giant Fujifilm, in what appears to mark the end of a months-long proxy battle with top investors.

In a statement to shareholders over the weekend, the EOS vendor said this was due to the failure by Fujifilm to deliver audited financial results relating to the ongoing accounting scandal at its joint venture Fuji Xerox in New Zealand.

Xerox said: “The board believes that the transaction cannot reasonably be expected to be completed under these circumstances, particularly given the court’s injunction of the transaction and the lack of shareholder support […] as well as the unresolved accounting issues at Fuji Xerox.”

Consequently, Xerox has now capitulated to the demands of activist investors Carl Icahn and Darwin Deason, who have fought to block the Fujifilm deal since it was first proposed earlier this year. The settlement also resolves Deason’s litigation against Xerox and its directors.
The terms appear identical to the ones agreed – and then swiftly retracted – earlier this month.

Icahn commented: “We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm. With that behind us and new shareholder-focused leadership in place, today marks a new beginning for Xerox.”

As part of the agreement, Xerox CEO Jeff Jacobson has resigned (again) and will be replaced by John Visentin who has been waiting in the wings to lead the company since being put forward by Icahn and Deason. Meanwhile, CEO of Icahn Enterprises Keith Cozza will assume the role of Xerox Chairman.

Deason added: “John Visentin has spent weeks preparing himself to run the company and speaking to numerous market participants regarding strategic alternatives. Xerox is fortunate to have someone with his experience and preparation to lead it through this exciting and transformative time.”

All in all, Icahn and Deason have replaced five members of the Xerox board with their own nominations, marking an end to the ongoing proxy battle. They have also agreed to withdraw any further candidates for election at the upcoming AGM. 

The next move for Xerox could well be putting itself back on the market. With Fujifilm out of the picture, the group could decide to open itself up to further bids. Market rumours suggested that investment firm Apollo – of which Visentin is also CEO – was preparing a rival offer.

Last week, Icahn and Deason said they would accept $40 per share (around $10 billion overall) if an interested party was looking to buy Xerox. 
Responding to the termination, Fujifilm said Xerox had “no legal right” to end the takeover and it was reviewing all available options, including legal action to seek damages. - (OPI)