Menu
Shareholder sues Xerox to block Fujifilm deal

Shareholder sues Xerox to block Fujifilm deal

Claims the US photocopier maker's board failed shareholders by approving a deal that undervalues the company

Xerox shareholder, Darwin Deason, asked a court on Tuesday to block the company's merger with Japan's Fujifilm Holdings claiming the US photocopier maker's board failed shareholders by approving a deal that undervalues the company.

The lawsuit is the latest in Deason and fellow shareholder Carl Icahn's fight to stop Fujifilm from taking over Xerox in a US$6.1 billion deal. The two investors, who control 15 per cent of Xerox, aruge the transaction dramatically undervalues Xerox and "disproportionately" favors Fuji.

The Fujifilm deal, "must be stopped dead in its tracks," said Deason's lawsuit filed in state court in New York.

Xerox has countered the claims saying that the merger seemed to be the best path for the company after a year of exhaustive examination of a number of alternatives.

"Mr. Deason’s allegations are without merit and the company will vigorously defend itself," Xerox said in a statement.

Under the deal announced last month, Fujifilm plans to combine the US company into their existing joint venture, to gain scale and cut costs as demand for office printing declines.

The joint venture has existed in various forms since 1962 and the current structure dates to 2001. The merger deal is expected to close in July or August.

The joint venture agreements have a previously undisclosed "crown jewel" lock-up right that gives Fuji control over Xerox's intellectual property and manufacturing rights in the Asia-Pacific market if Xerox sells a 30 per cent stake to another suitor, according to the lawsuit.

A "crown jewel" agreement is an offer to sell the stock or assets of a company to an investor most desirable to management - to prevent hostile takeovers.

Xerox said that Icahn had been privy to the details of the agreement through his representative, Jonathan Christodoro, on the Xerox Board, while Deason had been aware of the agreement when he sold his company, ACS, to Xerox in 2009.

"These documents have since been publicly disclosed. For any of them to assert that these agreements were 'shrouded in mystery' is disingenuous, at best," the company said in a statement early on Tuesday, before the lawsuit was made public.

Deason also included former Xerox Chief Executive Ursula M. Burns in the lawsuit, saying she was chairman of Xerox between May 2010 and May 2017 and had full knowledge of the Fuji-Xerox joint venture agreements.

In a letter to shareholders, who still have to approve the deal, Xerox said that walking away from the joint venture would require it to completely rebuild its supply chain, which would be extremely expensive and take years to implement.

On Monday, Icahn and Deason, who own a combined 15.2 per cent in Xerox, called upon shareholders to free "the company from the shackles of the Fuji Xerox joint venture."

Some analysts have said that Xerox and Fujifilm management seem locked into the deal and have limited options in terms of addressing Icahn's and Deason's opposition.

Shares of Xerox closed down 2.6 percent at US$29.17 on the New York Stock Exchange.

(Reporting by Laharee Chatterjee, Aishwarya Venugopal and Supantha Mukherjee in Bengaluru; Editing by Patrick Graham and Tom Brown)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Xeroxfujifilm

Featured

Slideshows

The making of an MSSP: a blueprint for growth in NZ

The making of an MSSP: a blueprint for growth in NZ

Partners are actively building out security practices and services to match, yet remain challenged by a lack of guidance in the market. This exclusive Reseller News Roundtable - in association with Sophos - assessed the making of an MSSP, outlining the blueprint for growth and how partners can differentiate in New Zealand.

The making of an MSSP: a blueprint for growth in NZ
Reseller News Platinum Club celebrates leading partners in 2018

Reseller News Platinum Club celebrates leading partners in 2018

The leading players of the New Zealand channel came together to celebrate a year of achievement at the inaugural Reseller News Platinum Club lunch in Auckland. Following the Reseller News Innovation Awards, Platinum Club provides a platform to showcase the top performing partners and start-ups of the past 12 months, with more than ​​50 organisations in the spotlight.​​​

Reseller News Platinum Club celebrates leading partners in 2018
Meet the top performing HP partners in NZ

Meet the top performing HP partners in NZ

HP has honoured its leading partners in New Zealand during 2018, following 12 months of growth through the local channel. Unveiled during the fourth running of the ceremony in Auckland, the awards recognise and celebrate excellence, growth, consistency and engagement of standout Kiwi partners.

Meet the top performing HP partners in NZ
Show Comments