Xerox Corp. scrapped its planned deal of $6.1 billion with Fujifilm Holdings Corp as part of a settlement with Darwin Deason and Carl Icahn two of its activist investors that also gives control of the photocopier giant based in the U.S. to a new set of management.
The victory for the pair of billionaire investors has put Fujifilm at more of a disadvantage if new negotiations were to start with Xerox, although the Japanese-based business remains in contention as Xerox is expected to be put up for sale at a higher price in an auction.
Xerox said that for a period of several weeks it repeatedly had asked Fujifilm to start talks immediately about improving the terms for the deal. However, the company said that despite its insistence, Fujifilm did not provide assurance it would do so within a timeframe that was acceptable.
Fujifilm quickly became combative in its stance saying that it disputes the right of Xerox to terminate its deal and was looking into its options that it said included taking legal action that would seek damages.
In January a complex deal was agreed to by both companies that would have merged US based Xerox into the current joint venture the two have in Asia known as Fuji Xerox and given control to Fujifilm.
That prompted both Deason and Icahn, who have a stake of 15% in Xerox and said the U.S. company was being given a lower value that it actually was, to begin a proxy fight.
The pair of activist investors always has maintained displeasure with the current joint venture’s structure and the settlement creates an uncertainty and concern over possible changes to the business that represents close to 50% of the revenue at Fujifilm.
Analysts believe the two companies are intertwined to a point of being nearly impossible to separate and Fujifilm continues to have some bargaining power, while doubting that the talks about other possible buyers is substantial.
Both Deason and Icahn say other buyers exist because they want to have a higher price, but that remains unknown said one analyst close to the deal.
Fuji Xerox, which Fujifilm owns 75%, is in charge of contracts that supply clients worldwide with Xerox services in the U.S. and Europe and service of Fuji Xerox in Asia.
In addition, Xerox is no longer building its office copiers instead it relies almost entirely on Fuji Xerox.