Activist Allies Push Xerox on Sale -- WSJ
January 22 2018 - 2:02AM
Dow Jones News
Carl Icahn forms front with Darwin Deason to terminate CEO and
Fujifilm venture
By David Benoit
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 22, 2018).
Xerox Corp.'s first- and third-biggest investors, billionaires
Carl Icahn and Darwin Deason, have formed an alliance and plan to
encourage the printer and copier giant to explore a potential sale,
according to people familiar with the matter.
The two investors, who together control more than 15% of Xerox's
shares, had already been separately calling for changes at the
Norwalk, Conn., company on slightly different topics, but this
would be the first time either has come out publicly for a
potential sale.
The fact that they are working together and own such a big stake
is sure to ratchet up the pressure on a company that is grappling
with slumping demand as the world becomes more digital -- and is
already considering a major transaction.
Messrs. Icahn and Deason plan to call on the company to explore
strategic alternatives, which could include a sale or other
transaction, to break its joint venture with Fujifilm Holdings
Corp., and immediately fire chief executive Jeff Jacobson, the
people said.
The Wall Street Journal reported this month that Fujifilm and
Xerox are discussing a range of potential deals that could include
a change of control of Xerox, though not a full sale. Xerox just a
year ago split itself in two, spinning off its business-services
unit into Conduent Inc.
Xerox has said that since the breakup it is ahead of its
transformation plan, and the board is willing to take any necessary
steps to create more value.
"The Xerox board of directors and management are confident with
the strategic direction in which the company is heading and we will
continue to take action to achieve our common goal of creating
value for all Xerox shareholders," a company spokesman said
Sunday.
Shares of Xerox have languished for years. They have rallied
lately on hopes of a deal, bringing the company's market
capitalization to about $8.1 billion.
Mr. Icahn, who owns a 9.7% stake, had already called for a
change in management and started a fight for four new board
members. The activist had campaigned successfully for change to the
board two years ago, but his former employee resigned as a director
last month to open the way to a new campaign.
Last week, Mr. Deason, who owns a 6% stake, sent a letter urging
Xerox to cancel its long-running joint venture with Fujifilm that
sells copiers and printers in the Asia Pacific region. Mr. Deason
got his stake when Xerox bought the company he founded, Affiliated
Computer Services Inc., for $6 billion in 2010.
The joint venture, Fuji Xerox, would likely be at the center of
any review given its strategic importance. Xerox and Fujifilm
believe there are large savings and efficiencies from expanding
their cooperation, a key reason they have engaged in deal talks,
people familiar with the matter have said.
Any other interested party, meanwhile, would need to navigate
Fujifilm's rights in the joint venture, a concern Mr. Deason has
raised. He has demanded Xerox disclose the agreement between the
two parties, saying the market has a right to know what Xerox is
allowed to do.
He called on Xerox to cancel the agreement following an
accounting scandal at the joint venture last year, saying that
should have breached the contract. Mr. Icahn seconded that.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
January 22, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.