May 14: Xerox Corp announced that it has ended the deal with Japanese company Fujifjilm Holdings Corp following a settlement with activist investors Carl Icahn and Darwin Deason. The settlement will see a reshuffling of the board of the photocopier giant apart from putting the Japanese company on the back foot in new negotiations.
Xerox said that the scrapping of the deal was partly due to the failure of Fujifilm in providing audited financial information for Fuji Xerox, the Asian joint venture of the firms, by an April 15 deadline. The company also added that there were material deviations between the audited and unaudited financial statements of Fuji Xerox.
Earlier in January, the two firms reached an agreement to merge Xerox into Fuji Xerox, prompting Icahn and Deason to launch a proxy fight against the move. The duo respectively holds 15% share in Xerox. The investors said that there were uncertainties concerning potential changes to Xerox, which accounts for nearly half of Fujifilm’s revenue.
Under the new settlement, Xerox will go through a change of its board, with Chief Executive Officer Jeff Jacobson expected to step down along with five other directors. Jacobson will be replaced by John Visentin, who was previously hired by Icahn to assist in fighting the merger move. Court documents also reveal his potential candidature consideration by the previous board.
Expressing disagreement in the move, Fujifilm said that it would dispute Xerox’s unilateral decision to scrap the transaction. The company also added that it would look at all options including legal action seeking damages. Although on the back foot, Fujifilm will still have a chance to strike back with Xerox likely to go up for sale in auction at a higher price now.
The current settlement is the second with the Icahn and Deason within a span of two weeks. The first among them was allowed to expire following the decision of Xerox to renegotiate a deal with Fujifilm. The stock dive that followed the agreement also played a part in the expiry of the previous settlement.