Xerox-Fujifilm Deal Opposed by Investors, Icahn & Deason
Speculation About Potential Xerox-Fujifilm Deal
In mid-January, The Wall Street Journal reported that Xerox was in talks to strike a major deal with Fujifilm. According to the WSJ, “The two companies, which already have a joint venture, are discussing an array of possible deals that may or may not include a change of control of Xerox.” One source indicated, however, that any Xerox-Fujifilm deal would not involve a complete takeover of Xerox.
Reuters reports that “Fujifilm has been seeking growth outside its shrinking photographic film business, stepping up its acquisition drive,” aiming to spend “$4.49 billion in strategic acquisitions over three years.” As Fujifilm has been linked with Xerox in a joint venture since 1962, there is definitely potential for greater cooperation. The venture, Fuji Xerox, provides business solutions for the Asia Pacific region, including Japan, China and the recently scandal-ridden Australia and New Zealand divisions.
Thems Fightin’ Words
There has been speculation that this maneuver is intended to protect Xerox leadership from the influence of activist-investor, Carl Icahn, who called for the collective removal of the “old guard” directors and CEO in an open letter to shareholders mid-December.
In response, Icahn released an additional open letter calling for the disclosure of the existing joint venture agreement with Fujifilm. Icahn went on to say that he neither approves nor disapproves of “any transaction with Fuji,” however, he remains convinced that the current management team are “ill-equipped to negotiate a major transaction with Fuji” or even “qualified to run Xerox, let alone some larger combination of Xerox and Fuji.” Icahn then went on to list CEO, Jeff Jacobson, and the five directors “who are a daily reminder of Xerox’s ignoble past” (taking a few pot shots at former CEO, Ursula Burns, in the process) and claimed should be removed to ensure the future of Xerox.
A few days later, Icahn teamed up with the third largest Xerox investor, Darwin Deason, in a joint statement calling for the termination or renegotiation of the agreement with Fujifilm, full disclosure of said agreement, exploration of strategic alternatives and the immediate termination of Jacobson and any directors who lack the “intestinal fortitude to challenge and demand accountability from Xerox management.” Deason and Icahn go on to claim that Jacobson is “neither qualified nor capable of successfully running this company, let alone negotiating a major strategic transaction that will do more than save his own job.”
What does this mean for the future of Xerox? To quote the rather ominous ending to the Deason-Icahn statement: “This is just the beginning.”