It marks a substantial victory for activist investors Darwin Deason and Carl Icahn, the so-called ‘CEO slayer’ who has claimed another scalp.
In a statement, Icahn described it as a “watershed moment for corporate governance generally and for Xerox specifically” and hoisted a question mark over Xerox’s future relationship with Fujifilm.
“With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm, our supposed ‘partner’ whose conduct over the last year is more unbelievable than what you see on fictional shows like House of Cards or Billions,” he stated.
“Thanks to our efforts and the courage and conviction of Darwin Deason, this is once again an exciting time to be a Xerox stakeholder,” Icahn added.
Xerox’s new board would meet immediately and begin a process to evaluate “all strategic alternatives to maximise shareholder value, including terminating or restructuring Xerox’s relationship with Fujifilm and proposed transaction with Fujifilm”.
The agreement follows a court order that put a temporary block on the sale of Xerox to Fujifilm, and will come into effect upon completion of legal technicalities by the court and will automatically terminate tomorrow (3 May) if this does not happen.
If it goes through, Keith Cozza the CEO of Icahn Enterprises will become Xerox chairman. Former IBM and HP executive John Visentin, who had been lined up as a replacement for Jacobson last year and has been working for Icahn since March as a consultant, will become vice chairman and CEO of Xerox.
The four other new board members will be Nicholas Graziano, Scott Letier, Jay Firestone, and Randolph Read.
Jacobson, together with chairman Robert Keegan, and existing Xerox board members Charles Prince, Ann Reese, William Hunter, Sara Tucker, and Stephen Rusckowski will all resign.
Xerox board members Gregory Brown, Joseph Echevarria and Cheryl Krongard are to continue in post.
The agreement, which would settle the ongoing litigation launched against Xerox by Deason and Icahn, was immediately challenged by Fujifilm.
In response to the latest developments, Fujifilm stated: “We have serious concerns about the announced settlement and we intend to file our objections with the court shortly. We believe the combination of Xerox and Fuji-Xerox is the best option to provide exceptional value to shareholders of both companies.
“We also believe that the Xerox new board of directors has an obligation to comply with the agreements which were unanimously approved on January 30, 2018 (US time) and signed by both companies on January 31, 2018.
“In addition, Fujifilm has decided it will appeal the court ruling of April 27, 2018, as we believe the record shows our good faith and arms-length negotiations for the benefit of all shareholders. We strongly believe that all Xerox shareholders should be able to decide for themselves the operational, financial, and strategic merits of the transaction.”
Fujifilm had planned to acquire $10.3bn (£7.6bn) turnover Xerox for $6.1bn and then merge it with joint venture Fuji Xerox, to create a new $18bn business that would have been headed by Jacobson.
Jacobson become CEO of Xerox on 1 January 2017 after it completed its split into two separate companies. He had a base salary of $1m but received total compensation including stock awards and incentive plan payments of $9.5m last year.
In his lawsuit, Deason accused Fujifilm of aiding and abetting “conflicted Xerox directors and its CEO” in breaching their fiduciary duty during the sale negotiations. The agreement reached yesterday does not affect these claims.
The court filings also state that an alternative deal could have been possible, and that HP had expressed an interest in buying Xerox in January 2018.