Published: Tue, May 15, 2018
Finance | By Claude Patterson

Xerox scraps $6.1 billion deal to merge with Japan's Fujifilm

Xerox scraps $6.1 billion deal to merge with Japan's Fujifilm

NEW YORK-Xerox Corp. shares fell after activist investors Carl Icahn and Darwin Deason prevailed in their bid to stymie Fujifilm Holdings Corp.'s $6.1 billion (U.S.) takeover of the US office equipment supplier and pushed out the company's chief executive officer.

Darwin Deason and fellow shareholder and billionaire hedge fund manager Carl Icahn sharply criticized the proposed transaction that would have seen Fujifilm, also known as Fuji, merge with Xerox without paying contributing cash.

Your selection ends months of infighting, for example a significant boardroom clearout.

Japan's Fujifilm Holdings Corp. said Monday it will file damages claims or take other appropriate measures against Xerox Corp. following the US copy machine maker's decision to pull out of a deal for its acquisition by the Japanese company.

"We do not believe that Xerox has a legal right to terminate our agreement", Fujifilm said in a statement.

While CEOs and directors should stay in close contact with major shareholders to monitor their concerns and hopefully avoid proxy fights, a conflicted CEO brokering major deals presented too many issues for Xerox.

They had criticised the USA company's chief executive and board for entering an agreement with Fujifilm that they said destroyed shareholder value.

Jeff Jacobson has resigned as CEO and as a member of the board.

John Visentin is appointed the new CEO and vice-chairman of the board.

Fujifilm had said last week it meant to resume discussions with Xerox on a potential combination on "superior terms", but it hadn't received a new proposal from the US company. "Despite our perseverance, Fujifilm has not given assurances that intends to do so within a reasonable time", the message reads Xerox. "Under the agreement, the Xerox board will be reconstituted to determine the best path forward to maximise value for Xerox shareholders".

Xerox said it believes that the transaction can not reasonably be expected to be completed under the circumstances, particularly given the court injunction and that shareholders didn't support it on current terms, as well as unresolved accounting issues at Fuji Xerox.

Xerox's former board said it believes the transaction can not be completed under the circumstances, citing a court injunction and "the lack of shareholder support for the transaction on current terms".

The acquisition would be the best option for the future of Xerox, Fujifilm said, adding that it will call for a rethink of the decision by Xerox.

Xerox cited concerns over how that delay would impact the company as one of the factors contributing to the termination of the agreement with Fujifilm. Under terms of the deal, Fujifilm would acquire a 50.1 percent stake in the combined company by paying a special $2.5 billion dividend to Xerox stockholders that was then worth about $9.80 per share.

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