Xerox CEO Resigns, Fujifilm Deal in Jeopardy
Xerox Settles with Icahn and Deason
Activist investors Carl Icahn and Darwin Deason successfully ousted Xerox CEO Jeff Jacobson, Chairman Robert Keegan and the majority of the Xerox board on May 1st. Under new leadership – predominantly backed by Icahn and Deason – the Xerox board is set to reconsider the disputed $6.1 billion acquisition deal with Fujifilm.
Court Injunction Puts Fujifilm Deal on Hold
Xerox reached this agreement with the investors – who hold 15% of Xerox stock between them – to settle their suit to block the Fuji Xerox deal. Icahn and Deason won a temporary injunction against the deal from the New York Supreme Court at the end of April.
“This transaction was largely negotiated by a massively conflicted CEO in breach of his fiduciary duties to further his self-interest and approved by a board, more than half of whom were perpetuating themselves in office for five years without properly supervising Xerox’s conflicted CEO,” Judge Barry R. Ostrager of New York’s Supreme Court in Manhattan said.
As Reuters reports, “Xerox said it decided to settle given the risks and uncertainty of prolonged litigation. The settlement did not resolve the activists’ claims against Fujifilm, which the shareholders have criticized for aiding previous Xerox management.”
Will Leadership Changes Kill Xerox 50-Year Relationship with Fujifilm?
In the settlement, Icahn and Deason won the right to replace the CEO and six of the ten Xerox board members. John Visentin, previously hired by Icahn to assist his fight with Xerox, will take over as CEO while Keith Cozza, CEO of Icahn Enterprises, will become Xerox Chairman.
With this leadership change, Fujifilm will be renegotiating the deal with a “new board led by a team that wants to not only end the sale but also potentially cancel the 50-plus-year joint venture, Fuji Xerox, that is at the heart of their relationship.”
Fujifilm also faced criticism from Ostrager for its actions which,” according to the WSJ, “could give the new Xerox board some leverage in discussions with Fujifilm.”
“We believe the record shows our good faith and arms-length negotiations for the benefit of all shareholders,” Fujifilm responded. “We strongly believe that all Xerox shareholders should be able to decide for themselves the operational, financial, and strategic merits of the transaction.” The WSJ further reports that Fujifilm is appealing the injunction against the deal, stating that “Xerox is obligated to comply with the agreement reached in January.”
Other buyers are already circling, however. Reuters reports that Apollo Global Management, a buyout firm, has expressed interest to Xerox in a “possible acquisition.”