The multibillion-dollar for the proposed takeover of Xerox by Japan’s Fujifilm is being stopped by the former, the company said.
The proposed deal was bitterly opposed by activist investors Carl Icahn and Darwin Deason with whom the iconic US printer and copier company has made struck agreement, accounted the company in a statement on Sunday.
There is very little legal right for Xerox to ax the deal and this so called “unilateral decision” by the U.S. company had been disputed by Fujifilm, the Japanese company said.
The two companies agreed to merge the operations of the U.S. company with those of Fuji Xerox which is a joint venture between the Xerox and Fujifilm according to the deal that was struck between the two and was made public in January. While 50.1 per cent of stake of Fuji Xerox would have been held by Fujifilm, the rest would have been owned by Xerox shareholders according to the agreement.
However, claiming that the deal had undervalued the U.S. company significantly, and would act as the death knell for Xerox, the deal was vehemently opposed by Icahn and Deason. An aggressive mission to put an end to the deal and the ouster of the top management of the company including CEO Jeff Jacobson was undertaken by both the investors who have a combined stake of 15 per cent in Xerox.
And when an agreement was struck between them and the board of Xerox earlier this month. it appeared that they had forced the company accept their demands. The board of directors at Xerox had decided to replace Jacobson and six other directors and placed their own representatives in addition to taking quick action to terminate or renegotiate the Fujifilm deal.
There were accusations from both sides as the agreement between the two parties apparently fell apart a few days later. However, now there seems to have been a settlement between the parties – Xerox and the activist investors, once again. Xerox said that board members selected by the activists have already replaced the five directors apart from Jacobson according to the agreement announced Sunday.
The proposed merger between Xerox and Fuji film was temporarily blocked by a court order in April which helped Icahn and Deason’s cause.
Despite repeated requests to the Japanese company Fujifilm for the beginning of a process of renegotiation of the deal and the terms of the merger by the Xerox board, the Japanese company “provided no assurance that it will do so within an acceptable timeframe”, he Xerox board said.
Hence, it felt it was “in the best interests of the company and all of its shareholders” to ax the Fujifilm deal and strike an agreement with Icahn and Deason, the board said.
Fujifilm still believes that the takeover is “the best option designed to allow the stockholders of both companies to share the enhanced future value of the combined company”, the company said.
(Adapted from Money.CNN.com)