Xerox terminates agreement to merge with Fujifilm

Xerox terminates agreement to merge with Fujifilm

Xerox has called off its transaction agreement with Fujifilm, choosing instead to side with activist investors Carl Icahn and Darwin Deason, the company said Sunday.

Xerox said it was terminating its agreement to combine with Fuji Xerox after Fujifilm failed to provide audited financials for the joint venture on time.

Icahn and Deason have said they believe other investors are "waiting in the wings" for Xerox while people familiar with the matter have previously said that buyout firm Apollo Global Management LLC APO.N has expressed interest in a bid for Xerox.

Jeff Jacobson resigned from his role as Chief Executive Officer and as a member of the Board of Directors of Xerox.

According to Bloomberg, John Visentin is expected to become the new CEO of the firm while Keith Cozza, CEO of Icahn Enterprises, is expected to become Chairman.

"Fujifilm will urge the Xerox board of directors to reconsider their decision", the Tokyo-based company said Monday in an emailed statement.

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It said it still believes the takeover is "the best option created to allow the stockholders of both companies to share the enhanced future value of the combined company". "Despite our insistence, Fujifilm provided no assurance that it will do so within an acceptable timeframe".

Helping Icahn and Deason's case was a court decision in late April that temporarily blocked the planned merger with Fujifilm. He also claimed in the lawsuit that the company's board breached its fiduciary duties. The pair said they would be willing to consider any offers for the company of $40 a share or more. The move came after the deal prompted a proxy fight from Icahn and Deason, who argued that the merger terms undervalued Xerox.

Fuji Xerox, 75 percent owned by Fujifilm, handles contracts that supply global clients with Xerox services in the United States and Europe, and Fuji Xerox services in Asia. Fujifilm has said it's appealing a USA court injunction blocking the takeover.

The 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".

Xerox said its new board would meet immediately and "begin a process to evaluate all strategic alternatives to maximize shareholder value".

Mr Icahn welcomed the outcome, stating "we have been exceptionally delighted that Xerox lastly declared the ill advised strategy to seize charge of the business to Fujifilm". He had also been a candidate under consideration by the old board to replace Jacobson as recently as a year ago, according to court documents.

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