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Abu Dhabi, UAESaturday 22 September 2018

Xerox chief to resign over Fujifilm Holdings takeover

Chief executive Jeffrey Jacobsen will step down following intervention from activit shareholders 

Fujifilm Holdings was due to gain control of Xerox in a deal that would create an $18 billion company and see the iconic American corporate giant launching into new lines of business. Tomohiro Ohsumi / Bloomberg
Fujifilm Holdings was due to gain control of Xerox in a deal that would create an $18 billion company and see the iconic American corporate giant launching into new lines of business. Tomohiro Ohsumi / Bloomberg

Xerox chief executive Jeffrey Jacobson and six board members are resigning in a win for activist shareholders including Carl Icahn who objected to the company’s planned takeover by Fujifilm Holdings.

The resignations are part of an agreement with investors Mr Icahn and Darwin Deason, according to a Xerox statement. The list of directors stepping down include Chairman Robert Keegan. The company said Keith Cozza, chief executive of Icahn Enterprises, is expected to be elected chairman while John Visentin is expected to be appointed as Xerox’s new chief executive.

The surprise settlement potentially puts the $6.1 billion deal struck in January with Fujifilm at risk. Xerox’s plan to sell itself to the Japanese company was temporarily blocked by a New York judge last week, after he determined Mr Jacobson pushed for the deal to preserve his own job.

Mr Deason sued to block the transaction, arguing that the deal fails to maximise value for investors. Mr Icahn, one of Xerox’s largest shareholders, also opposed the deal. The two shareholders combined hold about 13 per cent of the American office products maker.

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The new board plans to meet immediately to evaluate alternatives, “including terminating or restructuring Xerox’s relationship with Fujifilm and the proposed transaction with Fujifilm”, according to the statement. Fujifilm hasn’t made a proposal to enhance the transaction terms, Xerox said. The company approached the Japanese maker of office products to sweeten the deal, it confirmed in the statement.

A spokeswoman for Fujifilm said the company couldn’t immediately comment.

The feud between activist shareholders and the once-iconic company whose name is synonymous with office products is among a spate of shareholder activism. Billionaire Paul Singer’s activist fund, Elliott Management, escalated pressure on Hyundai Motor Group on a plan to merge units.

Mr Icahn hailed the agreement.

“This agreement mark a watershed moment for corporate governance generally and for Xerox specifically,” said Mr Icahn in the statement. “With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm.”

Mr Icahn alluded to tensions with Fujifilm, “our supposed ‘partner’ whose conduct over the last year is more unbelievable than what you see on fictional TV shows like ‘House of Cards’ or ‘Billions’.”

The agreement requires the company to hold its annual meeting within four months. The Xerox defendants denied any wrongdoing and agreed to the settlement to eliminate the risk of further litigation, the company said. The settlement must still be approved by a New York judge in Manhattan, according to a court filing.

Under the terms of the deal announced in January, Xerox, which has a market value of $8.2 billion, would first merge with a joint venture that the company operates with Fujifilm in Asia. Tokyo-based Fujifilm would ultimately end up owning 50.1 per cent of the combined entity, which would expand the joint venture to encompass all of Xerox’s operations.

Fujifilm shares were little changed in Tokyo trading Wednesday.

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