Xerox Responds to Icahn, Deason’s ‘Misguided Campaign’ to Undermine Proposed Fuji Xerox Merger

Just this morning, Carl Icahn and Darwin Deason published a fifth letter to Xerox shareholders, again seeking to persuade them to vote against the proposed merger of Xerox and Fuji Xerox, with Fujifilm purchasing a portion of Xerox and getting a 50.1 percent controlling interest in the new company. It didn’t take long for Xerox to respond to the latest Icahn/Deason letter, responding just a few hours later with a statement of its own.

At stake in what now appears to be an increasingly protracted battle is convincing the majority of Xerox shareholders to vote for the proposed merger. Together, Icahn and Deason own about a third of outstanding Xerox shares, and are seeking to persuade other Xerox shareholders to vote against the proposed deal – while Xerox argues that the deal will be a boon for Xerox, enabling it to penetrate Fuji Xerox’s Asia-Pacific market and reap the benefits of Fuji Xerox and Fujifilm technology, ultimately enabling it to become an imaging powerhouse, not just in office imaging, but, in other areas, including production and industrial printing.

In their letter to Xerox shareholders published this morning, Icahn and Deason urged urging shareholders to consider other alternatives, stating that one of the best alternative would be to consolidate with or sell Xerox to one of Xerox’s competitors, or to a private equity firm, which they say would optimize the business and return it to growth. They’ve argued that Fujifilm is under-paying for its share of Xerox, and that, instead, a competitor or private-equity firm would pay a “large premium” for Xerox “once they truly understood they could get around the Fuji Xerox joint venture agreements and eventually operate unfettered in Asia using the Xerox trademark and Xerox’s many patents.” Fuji Xerox is a 56-year old joint venture between Xerox and Fujifilm of Tokyo, Japan.

Both investors again urged Xerox shareholders to vote against the “ridiculous” deal, stating that “we will be exponentially better off if the Fuji scheme is not consummated,” and that Xerox shareholders would be “at the mercy of Fuji(film) – a company that already has proven to be suspect – and we will forever lose the opportunity to get a control premium for our shares.” The letter also stated that Xerox had miscalculated savings that could be achieved under the proposed deal.

Earlier this month, Deason filed a lawsuit against Xerox and Fujifilm in New York state court seeking to prevent the merger and alleging fraud. Xerox says the lawsuit is without merit.

Xerox Issues Response a Few Hours Later

A few hours later, Xerox fired back with a response, calling Icahn and Deason’s efforts a “misguided campaign to undermine Xerox’s combination with Fuji Xerox. The Xerox Board and management team evaluated a range of strategic options for the company and determined that the combination with Fuji Xerox is clearly the superior path forward for Xerox.”

Xerox also stated: “Combining with Fuji Xerox will create a global industry leader that leverages the respective strengths of Xerox and Fuji Xerox, maximizes the new company’s ability to innovate and compete in today’s market, and unlocks trapped value by eliminating duplicative efforts between the existing joint venture partners.

“The result is a significant opportunity for shareholders to realize long-term, sustainable value as holders of a stronger company, in addition to receiving the near-term substantial dividend payment at closing. The Xerox Board and management team remain focused on delivering value for shareholders through this transaction and the ongoing improvement of our business.”

Xerox also stated that it will continue to emphasize to its shareholders the merits of the transaction.

More Resources

• February 2018: Icahn, Deason Propose Sale of Xerox to Competitor or Private-Equity Firm
• February 2018: This Week in Imaging: Fujifilm Envisions the New Combined Xerox-Fuji Xerox
• February 2018: Xerox Responds to Deason Lawsuit that Seeks to Block Merger
• February 2018: Deason Files Lawsuit to Block Fujifilm Takeover of Xerox; Xerox Responds to Criticism
• February 2018: Combined Xerox and Fuji Xerox Will Create One of World’s Largest Copier Companies, Says Fujifilm CEO
• January 2018: Xerox and Fujifilm Announce Agreement for Xerox to Merge with Fuji Xerox
• January 2018: Xerox Reports Strong Fourth-Quarter 2017 Results, 65 Dealers Signed
• January 2018: Icahn, Deason Call for Xerox CEO, Directors Replacement, Renegotiation of Fuji Xerox Partnership
• January 2018: Deason, Shareholders, Demand Xerox Disclose Potential ‘Value-Destroying’ Fujifilm Deal
• 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