Sunday 20 May 2018

Xerox appeals court block on Fujifilm deal

Firm argues decision should rest with shareholders, not court, write Liana Baker and Laharee Chatterjee

The move came after Xerox said its board and management team would stay as an agreement it had reached with dissenting shareholders Darwin Deason and Carl Icahn to oust them expired last Thursday. Photo: Stock Image
The move came after Xerox said its board and management team would stay as an agreement it had reached with dissenting shareholders Darwin Deason and Carl Icahn to oust them expired last Thursday. Photo: Stock Image

Liana Baker and Laharee Chatterjee

Xerox has appealed a New York court's ruling to block its deal with Fujifilm, saying the decision to approve the deal rests with the companies' shareholders and not the court.

The move came after Xerox said its board and management team would stay as an agreement it had reached with dissenting shareholders Darwin Deason and Carl Icahn to oust them expired last Thursday.

In its appeal, Xerox disputed the court's findings that the board breached their fiduciary duties in approving the deal.

The New York Court temporarily blocked the transaction, finding Xerox CEO Jeff Jacobson "hopelessly conflicted" and that he sought to conclude the deal even though he was advised to end negotiations.

The printer and copier maker said in a statement on Friday that its board unanimously authorised the deal after "months-long discussions and deliberations".

"With the caveat that I have not been privy to these negotiations, I find the rejection of the settlement by the Xerox board to be extraordinary and highly unusual," said Guhan Subramanian, professor at Harvard's law and business schools.

Deason and Icahn said the agreement had expired over last-minute issues that arose in negotiations between the activists, Xerox and the judge before the court could act on the settlement to put it into effect ahead of the self-imposed deadline on Thursday evening.

Xerox said the agreement expired because of the "absence of stipulations" related to activist shareholders ending their litigations.

Deason, who owns about 15pc of the company, sued to block the merger, claiming Xerox's board failed shareholders by approving a deal that undervalues the company.

Charles Elson, professor of corporate governance at University of Delaware, said Xerox's move has created a lot of confusion in the market.

"I haven't seen this before. It may have happened somewhere but not at a company the size of Xerox. Ultimately the shareholders will decide, but this gives the activists more ammunition," Elson added.

Reuters previously reported that buyout firm Apollo Global Management has approached Xerox to express interest in a possible acquisition, casting uncertainty over the Fujifilm deal.

Fujifilm, which has objected to the settlement between Xerox and the activists, said it was satisfied the settlement had expired. Fujifilm has also said it is planning to appeal last week's court order.

Xerox and Fujifilm agreed in late January to a $6.1bn deal that would merge the US printer and copier maker into Fuji Xerox, an existing joint venture between Xerox and Fujifilm.

Reuters

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