Xerox pulls out of Fujifilm merger deal

The merger plans between Xerox and Fujifilm are unlikely to go ahead. Under pressure from two activist shareholders, Xerox withdraws from the merger deal. The two shareholders believe that Xerox as a company is undervalued in the deal with Fujifilm.

Both activist shareholders have enforced legal proceedings, among other things, for the installation of a new CEO and board of directors. It concerns billionaires Carl Icahn and Darwin Deason, who together own more than ten percent of the shares of Xerox. Under a settlement agreement, five new members have been appointed, while five existing members and the CEO, Jeff Jacobson, have resigned. The two shareholders had also previously tried to evict the board, but that agreement expired before a judge could approve it. The new board of directors is more on the side of the two shareholders and has already indicated that it will immediately look for ‘strategic alternatives’ to the merger deal with Fujifilm.

The intention is that any alternative to the merger with Fujiflm will bring more money to Xerox shareholders. According to the former board of directors, Xerox has called on Fujifilm to come up with better terms in the negotiations. Fujifilm, however, would not have given any assurance that it would come up with that in the short term. Fujifilm is also said to have submitted certain financial data too late.

Fujifilm has said, according to CNBC, that Xerox has no right to call off under the merger agreement. The Japanese company says it is considering all kinds of options, including going to court, to enforce compensation.

Xerox and Fujifilm announced the $6.1 billion deal earlier this year. The two companies have been working together for some time, including in the Fuji Xerox joint venture, which has been in existence since 1962, in which Fujifilm has a majority of the shares. If the merger between Xerox and Fujifilm were completed, the merged company would be the market leader in the global printer market.