Xerox shareholder demands disclosure

By Jo Francis, Thursday 18 January 2018

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Another major private investor in Xerox has taken issue with the firm’s strategy, specifically its relationship with Fujifilm.

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Xerox: criticism over lack of transparency regarding Fuji-Xerox

American billionaire Darwin Deason, who sold his company Affiliated Computer Services to Xerox for $6.4bn (£4.6bn) in 2010, has followed Carl Icahn in writing an open letter to Xerox’s board of directors.

Deason is the third largest individual shareholder in Xerox, and has a stake of around 6%.

In his letter, he said that up to this point he had chosen to engage with Xerox’s management privately but following last week’s revelations regarding a possible deal between Xerox and Fujifilm, was now changing his approach.

“I am changing my long-standing position to publicly demand that Xerox immediately disclose its critical joint venture agreement with Fujifilm Holdings Corporation,” he wrote.

“I further demand that the board hire new and independent advisors following discussions with us to evaluate the company’s strategic options with Fuji, including the potential termination of what I suspect but am unable to yet confirm is a one-sided value destroying agreement disfavouring Xerox, that Fuji has repeatedly breached, including last year through the Asian ‘WorldCom’ accounting scandal at Fuji Xerox.”

Deason said that shareholders and potential shareholders “have been perplexed and put off of the company by the venture with Fuji, speculating at the incredible materiality of its secret terms, from change of control provisions to manufacturing most of Xerox’s products to all manner of potential terms that incredibly in 2018 are not disclosed by the Company at all.”

A Xerox spokesman said: “We have reviewed the letter from Mr Deason and believe his assertions and characterizations are false and misleading. The Xerox board of directors and management are comfortable with our disclosure and confident with the strategic direction in which the company is heading, and we will continue to take action to achieve our common goal of creating value for all Xerox shareholders.”

In 2016 Deason began legal action against Xerox in an attempt to block its plans to spin off its business process outsourcing operations into a new business, now named Conduent. Xerox agreed a settlement whereby Deason received 180,000 shares in Xerox, and 120,000 shares in Conduent.

Shares in Xerox slipped by 1.33% to $31.92 yesterday.

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