Xerox to buy back $542m Xerox stake from Icahn

Icahn had increased his stake in Xerox last year
Icahn had increased his stake in Xerox last year

Xerox is set to purchase all of the company’s shares that are owned by activist investor Carl Icahn for around $542m (£442m).

The manufacturer said yesterday (28 September) that it has entered into a share purchase agreement to repurchase all of the shares of the company’s common stock beneficially owned by Icahn and certain of his affiliates at a purchase price of $15.84 per share.

This represents the closing price of the company’s common shares on 27 September 2023, the last full trading day prior to the execution of the purchase agreement.

The aggregate purchase price for the repurchase of approximately $542m is expected to be funded with a new debt facility.

Xerox said the transaction is expected to close no later than today (29 September) and that, subsequent to the closing of the transaction, the Icahn parties will no longer hold any Xerox common shares.

As the repurchase closes, Jesse Lynn and Steven Miller, who are employed by the Icahn parties, and James Nelson, an independent director, will resign from the company’s board of directors.

Scott Letier, who has served on the board since 2018, has been appointed chairman of the Xerox board of directors effective upon the closing of the repurchase transaction.

“Our decision to repurchase shares is reflective of the confidence we have in our business, our strategy and our ability to improve Xerox profitability and cash performance,” said Steve Bandrowczak, CEO of Xerox.

“For nearly a decade, Carl and his affiliates have served as important shareholders to Xerox, providing invaluable counsel, guidance and activism to support our evolution as a workplace technology leader.

“On behalf of Xerox and the board of directors, I would like to thank Carl and our departing directors for their dedication to Xerox and for contributing to our past, present and future success.”

Icahn had been an investor in Xerox since late 2015, when he took a 7.1% stake in the business. This had increased over time and, at the time of writing prior to the repurchase, Icahn Associates Corporation held a 21.8% stake in the company – with around 34.2 million shares – and was its largest shareholder. He had increased to this stake last year.

He was a vocal presence as an activist investor over the years, calling for the company to make changes to its board in 2017, opposing its proposed sale to Fujifilm in 2018, which was subsequently canned, and backing its bid to buy HP, which was scrapped when the Covid pandemic escalated in early 2020.

Icahn commented: “As a longtime shareholder of Xerox, I've watched this iconic brand endure the hardest of times and come out stronger, all while returning substantial amounts of capital back to shareholders.

“I helped Xerox maintain its independence while pursuing consolidation within the print industry. I will continue to be a champion of the company and hope my activism will long be remembered as Xerox continues its positive momentum.”

After Icahn's exit, the two biggest shareholders in Xerox are The Vanguard Group and Blackrock Institutional Trust, each with just over 9%. 

Xerox’s share price closed at $16.01 yesterday afternoon following the repurchase announcement, up 2.69% on the previous day.

The transaction was negotiated and unanimously recommended to Xerox’s board of directors by a special committee of the board, comprised solely of independent and disinterested directors.

The special committee was advised by independent financial and legal advisors. The entire board, with the exception of members employed by Icahn parties, who recused themselves from the vote, voted in favour of the transaction.

This repurchase was not made as part of any existing share repurchase program.

Moelis & Company acted as financial advisor to the special committee. Willkie Farr & Gallagher acted as legal counsel to the special committee, and White & Case acted as legal counsel to Xerox, in connection with the transaction.

In August Xerox sold metal additive manufacturing business Elem Additive Solutions to ADDiTEC. This followed its donation of PARC to SRI International and the sale of the Xerox Research Center of Canada to Myant Capital Partners earlier this year.

At the end of last week Xerox confirmed to Printweek that it had “decided to not exhibit” at Drupa 2024.

However, the manufacturer will be at next month's Printing United Expo in Atlanta, Georgia.