Darwin Deason’s lawsuit has resulted in a US court order putting a temporary block on Xerox’s sale to Fujifilm.
The court ruling on Friday (27 April) was made by Judge Barry Ostrager of the Supreme Court of the State of New York, who granted a preliminary injunction.
According to a Reuturs report, Ostrager said that Xerox chief executive Jeff Jacobson was “hopelessly conflicted” when he was in the process of agreeing the proposed $6.1bn (£4.5bn) takeover deal with Fujifilm.
“The facts abduced at the evidentiary hearing clearly show that Jacobson, having been told on November 10 that the Board was actively seeking a new CEO to replace him, was hopelessly conflicted during his negotiation of a strategic acquisition transaction that would result in a combined entity of which he would be CEO,” Ostrager said.
Xerox said it would immediately appeal the decision and issued the following statement: “Xerox disagrees with the court’s ruling to enjoin the shareholder vote on our proposed combination with Fuji Xerox and to waive the advance notice bylaw. The company strongly believes that its shareholders should be allowed to exercise their right to vote on the transaction and decide for themselves. Xerox will immediately appeal the court’s decision.
“The Xerox board undertook a rigorous process to reach its decision to approve the proposed transaction, including a comprehensive review of the company’s strategic and financial alternatives, as well as potential transaction structures in its negotiations with Fujifilm over a ten-month period. Xerox’s Board believes that a combination with Fuji Xerox is the best path forward to create value for the Company and all of its shareholders.”
The ruling came just a day after Xerox confirmed that it had approached Fujifilm about renegotiating the terms of the deal.
Deason, together with Carl Icahn, vehemently oppose the sale terms and launched the legal action in an attempt to block it. Deason is Xerox’s third-largest shareholder, while Icahn has the largest individual stake in the business.