September 17, 2019
In 2018 as the Fuji-Xerox deal went bad for the board of directors, after settlements were made and a reorganisation was started and four new board members were appointed, the proposed settlement for the shareholders in their class action lawsuit, has been rejected.
As Reuters reports, Justice Ostrager has refused to approve the deal that had been negotiated by the shareholder’s lawyers. The article said that in the judge’s view, the “plaintiffs’ lawyers had essentially allowed Deason and Icahn, who owned just 15 percent of Xerox shares, to seize control of the company with no consideration for shareholders – but with a $7.5 million (€6.8 million) fee deal for themselves.”
Justice Ostrager had approved an injunction in April 2018 to halt the Fuji-Xerox merger but consequently said that “if he had approved the settlement, Xerox directors would be released from liability for their role in approving the tainted Fuji deal and then walking away from it.”
Reuters reports that at the 6 September hearing, the plaintiff’s lawyer contested the judges claim of rendering control of the company to Icahn and Deason, explaining that the proposed settlement did not need Xerox to abandon the deal, neither did it give control on the board to Icahn and Deason. The lawyers argued that only after the shareholder vote and the resignation of two board members did Icahn and Deason get the necessary backing of the board.
Reuters added that “assuming that neither Xerox nor plaintiffs’ lawyers in the rejected class action do not appeal Justice Ostrager’s ruling, the decision means Xerox board members are not released from liability so the derivative suit remains alive. Korsinsky and Kupka said the goal is to win compensation for shareholders who received no consideration when Deason and Icahn effectively took control of the company.”
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