May 14, 2018
The long-running, twisting and often bitter battle between Xerox and two of its major shareholders appears to have finally drawn to a close, with the OEM announcing the termination of its deal with Fuji Xerox.
Owing to “the failure by Fujifilm to deliver the audited financials of Fuji Xerox by April 15, 2018”, according to Xerox, coupled with “the material deviations reflected in the audited financials of Fuji Xerox when delivered”.
Citing other circumstances that meant the merger, originally announced back in January, could not be ‘consumated’, this latest announcement seems to finally have brought down the curtain of one of the most protracted and vitriolic sagas of recent years.
It will surely be seen as victory for shareholders Carl Icahn and Darwin Deason, who between them own 15 percent of the OEM. The pair have been an unrelenting thorn in the side for Xerox, and particularly for its CEO, Jeff Jacobson, who will leave his post as part of the new settlement agreement.
This agreement between Icahn, Deason, and Xerox, also puts to bed the proxy contest in relation to the OEM’s 2018 Annual Meeting of Shareholders, as well as the lawsuit brought by Deason against Jacobson and Xerox last month.
As part of the settlement, Jacobson will stand down from both his position as CEO and as a Director of the company; he will be replaced in the former role by John Visentin, who will also become Vice Chairman of the Board of Directors, under new Chairman Keith Cozza – currently the CEO of Icahn Enterprises LP.
Jonathan Christodore, Nicholas Graziano and Scott Letier have also joined the new Board alongside Visentin and Cozza; the five replace outgoing Directors Robert J. Keegan, Charles Prince, Ann N. Reese, William Curt Hunter, and Stephen H. Rusckowski, who have resigned.
This deal also means Xerox and Icahn have withdrawn their nominations of any other director candidates for election at the 2018 Annual Meeting of Shareholders, which has been postponed to a later date.
The new Board will now meet to evaluate strategic alternatives to the cancelled Fuji Xerox deal, focussing on ways to “maximise shareholder value.”
“Over the past several weeks, the Xerox Board has repeatedly requested that Fujifilm immediately enter into negotiations on improved terms for a proposed transaction,” read a statement from the outgoing Board of Directors. “Despite our insistence, Fujifilm provided no assurance that it will do so within an acceptable timeframe. The Xerox Board believes that the transaction cannot reasonably be expected to be completed under these circumstances, particularly given the court’s injunction of the transaction and the lack of shareholder support for the transaction on current terms, as well as the unresolved accounting issues at Fuji Xerox.”
The statement also explained that the proxy contest posed “potential instability and business disruption”, and that it had taken the decision to terminate with Fujifilm, and settle with Icahn and Deason, in the absence of a “viable, timely transaction” with the Japanese company, saying the settlement was “in the best interests of the company and all of its shareholders.”
Carl Icahn heralded “a new beginning for Xerox”, and said he was “extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm.”
“We have often said that the most important person at a company (by far) is the CEO,” he added. “We are therefore also pleased that John Visentin, a tried and true veteran in this area, will be taking the helm.”
“John Visentin has spent weeks preparing himself to run the company and speaking to numerous market participants regarding strategic alternatives. Xerox is fortunate to have someone with his experience and preparation to lead it through this exciting and transformative time,” concurred Deason. “With the limiting Fujifilm agreement terminated, Xerox is now positioned to conduct a true, robust strategic alternatives process.”
Earlier this month, the OEM appeared to have reached agreement with Deason and Icahn, only for it to fall through after the settlement deal expired without resolution.
Followers of the battle for Xerox will hope that today’s news is the final twist in the tale, but with Fujifilm reportedly planning to appeal Xerox’s decision to terminate, there are no guarantees yet that this most contorted of conflicts is over.
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