By Jo Francis, Tuesday 08 May 2018
Xerox’s board has launched an appeal against the court order that put a temporary bar on its proposed sale to Fujifilm, in a move that has provoked further outrage from shareholders Darwin Deason and Carl Icahn.
In the latest turn of events surrounding the planned deal with Fujifilm, Xerox has now disputed the court ruling that stated that the Xerox board had breached their fiduciary duties when approving the transaction.
“To the contrary, the Xerox board unanimously authorised the transaction after months-long discussions and deliberations, and based on its good faith judgment that the transaction represented the value-maximising alternative for the company’s shareholders,” the firm said.
The legal filing accompanying the appeal states: “Even if this court credits the IAS court's finding that Xerox's CEO, Jeff Jacobson, was ‘massively conflicted’ in connection with the transaction – and the record supports no such conclusion – there is absolutely no legal basis for challenging the unanimous determination of the nine other Xerox directors (all independent and, as the IAS Court recognised, all ‘highly credentialed and experienced’) that the deal Jacobson helped negotiate was in the best interests of Xerox's shareholders.”
The activist investors behind the legal action, Darwin Deason and Carl Icahn, responded by posting a $150m bond to preserve the two preliminary injunctions issued by the New York State Supreme Court in their favour.
In their latest salvo surrounding the takeover saga, the duo again hit out at Xerox’s board and Fujifilm, and signed off with the hashtags #lameduckboard and #lameduckCEO in a further open letter to shareholders.
They said: “The Deason litigation matters now more than ever. As we write this letter, the lame duck Xerox board is filing an appeal to fight the judge’s clear and definitive opinion, an action done solely to look out for themselves individually and to help their partner, Fuji.
“This appeal allows Fuji to have a hand in deciding the future of Xerox, which is both unconscionable and inappropriate. The future of Xerox should be decided by Xerox shareholders and its board, not a third party that has a track record of underhanded and one-way dealings with Xerox. This appeal is yet another mind-boggling example of this lame duck board choosing itself, and Fuji, over Xerox shareholders.
“We call on the Xerox board to do something it has failed to do on countless occasions: put Xerox shareholders first and immediately end this unrest.”
Icahn and Deason said that they would consider an all-cash bid of $40 per share, whereas the current deal on the table is worth around $28 per share.
Xerox’s legal appeal stated that the $150m bond was inadequate and not “rationally related” to the potential damages Xerox would incur. It said: “The loss in value if the transaction does not proceed is in the billions of dollars.”