Deason, Shareholders, Demand Xerox Disclose Potential ‘Value-Destroying’ Fujifilm Deal

In December 2017, it was gadfly billionaire activist investor Carl Icahn who blasted Xerox leadership, saying the firm “desperately needs new leadership,” now this week, one of the Xerox’s other largest shareholders, Dallas businessman Darwin Deason is also pushing for changes to the Xerox board and calling for more transparency about its partnership with Japan’s Fujifilm. Last week, The Wall Street Journal had reported that  Xerox is in talks for a deal with Japanese camera maker Fujifilm Holdings of Japan – which its partner in Fuji Xerox – that could include a change in control of Xerox.

Deason sold Affiliated Computer Services to Xerox in 2010 for $6.4 billion. In January 2017, Xerox completed its separation into two two publicly traded companies, Conduent Incorporated, which is devoted to providing business-process outsourcing (BPO) services essentially derived from Affiliated Computer Services, and Xerox, which is devoted to providing copier/MFPs, printers, their related supplies and solutions, and document-outsourcing services..

Deason sent a public letter to Xerox’s board of directors on January 17, 2018, calling for changes to “protect all Xerox shareholders and to ensure that [Xerox] does not take further steps to damage our collective shareholding investment.” Deason states that the possible deal with Fujifilm represents: “a one-sided value destroying agreement disfavoring Xerox.”

The letter demands that Xerox immediately disclose its existing  joint-venture agreement with Fujifilm, and that the Xerox board hire new and independent advisors following discussions with Deason.

Deason says that the Xerox board should be “aggressively pursuing our shareholder rights to terminate the Fuji venture and liberate the Company globally, (but) …instead plot in secret in violation of the law to cook up a short term band-aid is insufficient and unwise in the extreme and warrants shareholder action.

Deason publicly demands that “Xerox immediately disclose its critical joint venture agreement with Fujifilm Holdings Corporation (“Fuji”) in accordance with the unambiguous disclosure requirements of the U.S. securities laws.”

Deason is the third-largest shareholder in Xerox, according to regulatory filings, with control over six percent of the company’s shares.

In a statement, Xerox called Deason’s assertions “false and misleading.”

“The Xerox board of directors and management are comfortable with our disclosure and with the strategic direction in which the Company is heading,” the statement said. “We will continue to take action to achieve our common goal of creating value for all Xerox shareholders.”

More Resources

• January 2018: Under Pressure from Icahn and Seeking New Growth, Xerox May be Negotiating Deal with Fujifilm
• December 2017: Billionaire Investor Icahn Blasts Xerox Board, Says Xerox ‘Desperately Needs New Leadership’
• December 2017: Carl Icahn to Nominate Four Directors to Xerox Board
• June 2016: Carl Icahn Adds Christodoro to Xerox Board of Directors
• October 2016: Billionaire Investor Deason Files Lawsuit to Block Xerox Split into Two Companies
• October 2016: Xerox Rolls Out New Conduent Brand Logo as it Prepares for Split into Two Companies
• October 2016: Xerox’s BPO Group to Trade as Conduent on NY Stock Exchange Following Split
• November 2015: Billionaire Investor Icahn is Second-Largest Xerox Shareholder; Considering ‘Strategic Alternatives’ for Xerox