Under-pressure Xerox asks for better terms

A high-profile campaign by two investors to get the terms of the Xerox-Fujifilm takeover improved appears to be bearing fruit – Xerox has asked to renegotiate the deal currently on the table.

Activist investors Carl Icahn and Darwin Deason have been on the offensive since the proposed merger of Xerox with Fuji-Xerox was announced in January, with Deason filing an amended lawsuit earlier this month. Icahn had also taken issue with the Xerox board prior to the proposals being made public.

The mooted deal would see Fujifilm acquire Xerox for $6.1bn (£4.4bn) and merge it with existing Asia Pacific joint venture Fuji-Xerox, to create a new $18bn industry player.

Icahn and Deason had previously claimed that the current deal “undervalues Xerox and disproportionately favours Fuji”, and urged Xerox shareholders to reject it.

Although Fujifilm insisted the proposed terms were “fair”, it confirmed that Xerox has requested a renegotiation of the existing deal.

In a statement, a Fujifilm spokesperson said: “The terms and conditions which Fujifilm and Xerox Corporation agreed on January 31 are fair. The terms and conditions were discussed in an appropriate manner, based on fair valuations from independent experts retained by both companies. Moreover, the agreement has been approved unanimously by Fujifilm's Board and Xerox's Board. However, it is true that we have received a request for a renegotiation from Xerox,” the spokesperson said.

“Fuji Xerox and Xerox have, to this day, focused only on selling in their respective territories. It is clear that the combination of the two companies will lead to cost reductions by removing overlaps, as well as numerous synergies such as sales growth through a globally unified marketing strategy. We are fully confident that the combination is the best and only plan in creating the future of Xerox. We are also confident that Xerox shareholders judge this the same,” the statement concluded.

Xerox also confirmed that an improved deal for its shareholders was under discussion.

“Following testimony by the chairman of its board of directors in court on April 26, 2018, Xerox confirmed that it has entered into discussions with Fujifilm regarding a potential increase in consideration to be received by Xerox shareholders in the company’s proposed combination with Fuji Xerox.

“Consistent with its commitment to shareholder engagement, Xerox has been meeting with shareholders since the announcement of the transaction. Xerox has listened to their input and carefully considered their views. There can be no assurance that these discussions will result in any amendment to the transaction agreement between the parties.”

Both Icahn and Deason have a track record of successfully taking aggressive action against the boards of businesses when they as shareholders disagree with corporate strategy.


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