May 8, 2018
With every day seeming to bring a fresh twist in this increasingly complex tale, developments are coming thick and fast, among them the filing of an appeal by Xerox and new open letters published by Deason and Icahn.
Very briefly, at the beginning of May 2018, it looked as if embattled Xerox and its two major shareholders, Carl Icahn and Darwin Deason, were ready to bury the hatchet and resolve the increasingly bitter conflict that has been rumbling on for weeks. A settlement agreement was signed on 1 May 2018, and several key figures on the Xerox board prepared to step aside in order to put an end to the shareholders’ proxy fight.
However, the peace was short-lived, and now events seem to be taking an increasingly vitriolic turn, with Xerox announcing that the agreement had expired, which meant that the existing Board would remain in place.
Then on 4 May 2018 Xerox announced that it has taken an appeal from the decision enjoining the Fuji Xerox combination. Xerox said that it “strongly believes that the decision is contrary to well-established New York law vesting the Board of Directors of Xerox with the business judgment to enter into the transaction agreement with Fujifilm and that the decision to approve should rest with Xerox’s shareholders, not the Court.”
The OEM went on to say that “the appeal disputes the court’s finding that the Xerox Board breached their fiduciary duties in approving the transaction. To the contrary, the Xerox Board unanimously authorised the transaction after months-long discussions and deliberations, and based on its good faith judgment that the transaction represented the value-maximising alternative for the company’s shareholders.”
Icahn and Deason responded swiftly with an open letter penned to shareholders, in which they described the OEM’s termination of the agreement as an “inexplicable turn of events” and stated that the “brazen self-interest” of the company “defies description”.
The pair then wrote another letter, published on 7 May 2018, in which they explained that they were posting a $150 million (€126.3 million) bond “to preserve the two preliminary injunctions issued by the New York State Supreme Court in the litigation brought by Darwin Deason against them.”
In the letter, they described the Xerox board as a “lame duck” and said that they intended to see that the OEM’s CEO and other board members were “held fully and personally liable for their misconduct.”
They also announced their intention to “see that Fujifilm is held fully liable as an aider and abettor of the continuing breaches of fiduciary duties by those directors.”
The saga continues.
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