In Stunning Reversal, Xerox Yields to Deason and Icahn in Far-Reaching Settlement

In a stunning development, the bitter battle between activist investors Carl Icahn and Darwin Deason and Xerox appears to be over, with Xerox making a number of concessions, and with Xerox CEO Jeff Jacobson resigning.

Under the agreement, which Xerox announced yesterday, Xerox settled its litigation with Deason, and named John Visentin, a former HP and IBM executive, the new Xerox CEO, and named Keith Cozza of Icahn Enterprises chairman of the Xerox board.

Earlier this year, Deason had sued Xerox and Fujiflm, seeking to block a proposed Xerox-Fuji Xerox deal under which Xerox would be merged with Fuji Xerox, with Fujifilm having a controlling 50.1 percent of shares of the new combined company. Under the proposed deal,  Xerox CEO Jacobson would be the new company’s CEO. Deason’s lawsuit had stated that  last year, the Xerox board was seeking to replace Jacobson, and that Jacobson went against the Xerox’s board’s wishes by negotiating the proposed deal with Fujifilm. Deason’s lawsuit also sought to enable him to nominate members to the Xerox board.

This week, the New York State Supreme Court issued a preliminary injunction that temporarily blocked the proposed deal. A Xerox spokesperson had previously said that Xerox would appeal the court decision.

The agreement announced yesterday doesn’t affect Deason’s lawsuit’s claims against Fujfilm that Fujfilm “aided and abetted” the proposed Xerox-Fuji Xerox merger.

Xerox shareholders were to have voted on the proposed deal this month at the Xerox 2018 Annual Meeting of Shareholders, which will now be postponed to a later date. Xerox’s agreement with Icahn and Deason is said to  “resolve that pending vote,” as well as the ongoing litigation against Xerox and its directors related to the company’s proposed combination with Fuji Xerox.

The agreement will become effective upon approval by the court, and will end Deason’s litigations against  the Xerox defendants. The agreement will automatically end, however, if the court doesn’t act before 8:00 p.m. ET on May 3, 2018.

Once the court approves the agreement:

  • Xerox will appoint six new members to its board of directors: Keith Cozza, Nicholas Graziano, Scott Letier, Jay Firestone, Randolph Read, and John Visentin.
  • Jeff Jacobson will resign as Xerox CEO and as a member of its board of directors.
  • Robert J. Keegan, Charles Prince, Ann N. Reese, William Curt Hunter, Sara Martinez Tucker, and Stephen H. Rusckowski will also each resign from the Xerox board.

Before joining the Xerox Board of Directors, Keith Cozza, the CEO of Icahn Enterprises, is expected to be elected chairman of the Xerox board and  Visentin is expected to be appointed as the new vice chairman and CEO. Gregory Brown, Joseph Echevarria, and Cheryl Krongard will continue to serve as members of the Xerox Board of Directors.

As part of the agreement, Xerox and Carl Icahn will withdraw their respective nominations of any other director candidates for election at the 2018 Annual Meeting of Shareholders. Xerox will continue to waive the advance notice bylaw for the 2018 Annual Meeting of Shareholders until May 30, 2018. As noted, the Xerox 2018 Annual Meeting of Shareholders will be postponed to a later date.

Xerox also stated that after the agreement becomes effective, the new board of directors plans to meet immediately to, among other things, begin a process to evaluate all strategic alternatives to maximize shareholder value, including terminating or restructuring Xerox’s relationship with Fujifilm and the proposed transaction with Fujifilm.

The current Xerox Board of Directors issued the following statement concerning the agreement:

“After careful consideration of shareholders’ feedback on the proposed combination with Fuji Xerox, Xerox approached Fujifilm regarding a potential increase in consideration to be received by Xerox shareholders. As yet, Fujifilm has not made a proposal to enhance the transaction terms.

Following the court’s decision last week to enjoin Xerox’s proposed combination with Fuji Xerox, the Board considered the significant risk and uncertainty of a prolonged litigation, during which the company would be prohibited from negotiating with Fujifilm, as well as the potential instability and business disruption during a proxy contest. As a result, the Xerox Board of Directors determined that an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders.

This agreement will help ensure that Xerox and its employees will be able to continue to focus on serving customers and building on the company’s financial and operational performance.”

Carl Icahn issued the following statement concerning the agreement:

“We believe Friday’s decision and this agreement mark a watershed moment for corporate governance generally and for Xerox specifically. With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm, our supposed “partner” whose conduct over the last year is more unbelievable than what you see on fictional TV shows like House of Cards or Billions. Thanks to our efforts and the courage and conviction of Darwin Deason, this is once again an exciting time to be a Xerox stakeholder.”

Darwin Deason issued the following statement concerning the agreement:

“The future for Xerox is extremely bright. With John Visentin at the helm, receiving support and guidance from Carl Icahn and me, I am confident the alternatives for Xerox and its shareholders will be fully and expeditiously maximized. John is the right leader at the right time for Xerox.”

The agreement between Xerox, Icahn and Deason will be filed with the U.S. Securities and Exchange Commission.

New Xerox CEO

Giovanni (“John”) Visentin is expected to be the new vice chairman and CEO of Xerox.

Previously, Visentin was a senior advisor to the chairman of Exela Technologies and an operating partner for Advent International, where he provided advice, analysis, and assistance for operational and strategic business matters in the due diligence and evaluation of investment opportunities.

Visentin was also a consultant to Icahn Capital in connection with a proxy contest at Xerox from March 2018 to April 2018.

In October 2013, Visentin was named executive chairman and CEO of Novitex Enterprise Solutions following the acquisition of Pitney Bowes Management Services by funds affiliated with Apollo Global Management.

In July 2017, Novitex closed on a merger with SourceHOV and Quinpario Acquisition to form Exela Technologies, becoming one of the largest global providers of transaction processing and enterprise information management solutions.

Visentin was previously an advisor with Apollo Global Management and contributed to the company’s February 2015 acquisition of Presidio, a provider of professional and managed services for advanced IT solutions, where he was chairman of the board of directors from February 2015 to November 2017.

Visentin has also managed multi-billion dollar business units in the IT-services industry at both Hewlett-Packard and IBM. He graduated from Concordia University in Montreal, Canada, with a Bachelor of Commerce degree.

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