Xerox, Fujifilm Said to be Renegotiating Proposed Merger; Other Interested Buyer Revealed

Fujifilm CEO and Chairman Shigetaka Komori

CNBC reports that Xerox and Fujifilm are in “active talks” to renegotiate a deal that the two companies struck in January, according to remarks by their lawyers at a court hearing on Thursday.

The proposed deal, which was announced in January 2018, would enable Fujifilm to acquire 50.1 percent of Xerox for $6.1 billion; Xerox would then be combined with Fuji Xerox. Xerox shareholders would be paid $2.5 billion in a special dividend. Current CEO Jeff Jacobson would be CEO of the new combined company.Also included in court papers was a December 2017 letter from Xerox board member Cheryl Gordon Krongard to  Xerox Board Chairman Robert Keegan, expressing  concern that Xerox CEO Jeff Jacobson was not the right man for the job, since he continued negotiations after being instructed not to. In the letter, Krongard wrote: “He blatantly violated a clear directive. We have a rogue executive.” Activist investors Carl Icahn and Darwin Deason, who have been seeking to stop the proposed deal, have said that Jacobson continued to negotiate a deal with Fujifilm even after the Xerox board told him not to.

 

According to Institutional Investor, a presentation from Deason in court this week included a claim that Xerox’s board had received an inquiry from Hewlett-Packard about a possible deal in January 2018, but that Jacobson and Xerox’s board did not give HP enough time and told the company it had to make a proposal “aggressively and quickly.”

Deason’s presentation  also claimed that Xerox’s board had received an inquiry from Hewlett-Packard about a possible deal in January but that Jacobson and Xerox’s board did not give HP enough time and told the company it had to make a proposal “aggressively and quickly.”

However, Xerox stated yesterday that Jacobson has always conducted himself with the utmost integrity as CEO, and in negotiations with Fujifilm, and that he at no point exceeded the authority granted to him by the board.

On Wednesday, Xerox also said that Xerox shareholders should disregard information from Icahn and Deason, stating the two are conducting a “highly disingenuous campaign” that distorts and omits key facts about Xerox and the proposed merger.

The Xerox statement is as follows: :”Informed readers will clearly see numerous misrepresentations and computational errors, including those regarding the company’s debt balance, valuation multiple, margin structure, solid accounting policies, and current management’s track record of strong execution.”

Xerox shareholders will vote on the proposed deal next month.

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