Coverage: Xerox drops deal with Fujifilm

Xerox Corp. said on Sunday it was ending a planned $6.1 billion deal with Fujifilm Holdings Corp. and had reached a settlement with activist investors Carl Icahn and Darwin Deason.

Alwyn Scott of Reuters had the news:

The company said Chief Executive Officer Jeff Jacobson had resigned and that John Visentin was expected to be the new CEO. Xerox also replaced five directors as part of a board reshuffle. The company said earlier this month that the CEO and board changes were planned.

“We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm,” Icahn said in a statement. “We have often said that the most important person at a company (by far) is the CEO. We are therefore also pleased that John Visentin, a tried and true veteran in this area, will be taking the helm.”

Xerox said the settlement with Icahn and Deason resolved a proxy contest set to play out at Xerox’s 2018 annual meeting, originally scheduled for June 13.

The company said earlier this month it was seeking better terms for a proposed merger with Fujifilm. The deal had prompted the proxy fight from Icahn and Deason, who own 15 percent of Xerox and said the Fujifilm deal undervalued Xerox.

Cara Lombardo of The Wall Street Journal reported that Xerox will begin exploring alternatives:

Xerox said it reached a settlement to replace its chief executive and overhaul its board after it ended a plan to combine with its joint venture with Fujifilm. This is Xerox’s second settlement with activist shareholders Carl Icahn and Darwin Deason; the company had earlier struck a deal with the two billionaires to oust Chief Executive Jeff Jacobson and flip the board, but that agreement abruptly expired earlier this month before receiving court approval.

If it remains in place, the new deal marks a win for Icahn and Deason, who agreed to table their proxy fight after several months of drama. They opposed the plan to combine with the joint venture Fuji Xerox, arguing it undervalued Xerox, and had planned to run their own slate of directors for Xerox’s board.

Now, the new Xerox board will immediately begin examining strategic alternatives.

As part of the settlement, John Visentin will replace Jacobson as chief executive, the company said Sunday. Visentin is a former executive at several technology companies and had been working with the activist investors at Xerox.

Eric Platt and James Fontanella-Khan of The Financial Times reported that Fujifilm failed to provide audited financials:

The US printer and photocopier maker said that its long-time Japanese partner had failed to deliver audited financials, limiting its ability to consummate the transaction.

Xerox’s capitulation to the demands of Mr Icahn and Mr Deason, who together own more than a tenth of the $8bn company, is a huge victory for the activist investors. They had strongly criticised the US company’s chief executive and board for entering into an agreement with Fujifilm that they deemed destroyed shareholder value.

As part of its decision to terminate the deal, Xerox fired its existing chief executive Jeff Jacobson. He will be replaced by former IBM and Hewlett-Packard executive John Visentin, while Keith Cozza of Icahn Enterprises will become the chairman of the board. In addition Xerox appointed a new slate of directors to its board that will give Mr Icahn greater power to control the direction of the company.

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