Blog Exposure - Fujifilm to Take Xerox to Court for Pulling Out of Merger Agreement

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LONDON, UK / ACCESSWIRE / May 22, 2018 / If you want access to our free research report on Xerox Corp. (NYSE: XRX), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=XRX as the Company's latest news hit the wire. On May 18, 2018, news agency Reuters reported that Xerox could be sued by Fujifilm Holdings Corp. ("Fujifilm") for terminating the $6.1 billion merger deal that both Companies had entered into in January 2018. Fujifilm's decision follows Xerox's decision to terminate the merger agreement on May 13, 2018. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Fujifilm's Stand

Fujifilm is planning to file a lawsuit against Xerox, seeking damages for terminating the merger agreement on May 13, 2018. As per the terms of the complex deal signed in January 2018, Xerox would merge with Fuji Xerox, a joint venture (JV) between Xerox and Fujifilm wherein Fujifilm would own 50.1% of the merged Company and the balance 49.9% would be owned by the shareholders of the merged Company.

Fujifilm believes that Xerox had no legal basis for backing out of the proposed merger deal. Fujifilm shared its sentiments on the matter on May 18, 2018, while discussing its earnings for the full fiscal year 2017 ended March 31, 2018. Fujifilm is currently reviewing its legal options and is planning to file a lawsuit as soon as possible.

If Fujifilm goes ahead with the lawsuit, it plans to prove that Xerox had no legal rights to terminate the deal and the merger was actually in the best interest of Xerox's shareholders.

Commenting on the matter, Kenji Sukeno, Chief Operating Officer (COO) of Fujifilm, said:

"Fujifilm disputes Xerox's unilateral decision to terminate the transaction. We do not believe that Xerox has a legal right to terminate our agreement and we are reviewing all of our available options, including bringing a legal action seeking damages."

In the meantime, in the event that the new Xerox board approaches Fujifilm with a new proposal, the Japanese Company would deliberate only if the proposal would be beneficial to the shareholders of Fujifilm.

Kenji Sukeno added:

"We don't need to be in a rush to close this deal. We are not bound by time."

Recent Developments at Xerox

On May 13, 2018, Xerox announced its decision to terminate the merger deal with Fujifilm. Xerox cited various reasons for its decision mainly being 'the failure by Fujifilm to deliver the audited financials of Fuji Xerox by April 15, 2018, and the material deviations reflected in the audited financials of Fuji Xerox, when delivered, from the unaudited financial statements of Fuji Xerox and its subsidiaries provided to Xerox prior to the date of the Subscription Agreement, and taking into account other circumstances limiting the ability of the Company, Fujifilm, and Fuji Xerox to consummate a transaction'.

Simultaneously, Xerox entered into a settlement with activist investors Carl Icahn and Darwin Deason to settle the various issues. The settlement provided for the ending of the proxy war with regards to the nomination of members for Board position during the Company's 2018 Annual Meeting of Shareholders, as well as the resolution of the lawsuit filed against Xerox and its directors. The matter, however, does not impact the claims of Darwin Deason and other Xerox's shareholders against Fujifilm for aiding and abetting. Both investors had been opposing the deal from the start. Deason had also approached the New York State Supreme Court in February 2018 to stop the deal, stating that the deal was one-sided and failed to maximize value for investors.

As per the terms of the settlement with Icahn and Deason, Xerox agreed to appoint five new members to its Board. The new members include Jonathan Christodoro, Keith Cozza, Nicholas Graziano, Scott Letier, and John Visentin. Other Board members who would continue to serve as Xerox Board members include Gregory Brown, Joseph Echevarria, Cheryl Krongard, and Sara Martinez Tucker. However, Board members Robert J. Keegan, Charles Prince, Ann N. Reese, William Curt Hunter, and Stephen H. Rusckowski resigned from their positions. Jeff Jacobson, Chief Executive Officer (CEO) of Xerox, who was the key proponent of the Xerox - Fujifilm merger, also resigned from his CEO position and as the member of the Xerox Board.

In the meantime, as part of the settlement, Xerox and Icahn will withdraw their candidates nominated to contest the election for Board positions during the 2018 Annual Meeting of Shareholders.

Following this, on May 16, 2018, Xerox announced the appointment of John Visentin as the Vice Chairman and CEO and the election of Keith Cozza as the Chairman of the Company's Board.

Xerox has not responded so far about Fujifilm's plans file a lawsuit against the Company. With both parties claiming to have the best interest of Xerox's shareholders in mind, it would be interesting to see Xerox shareholders' response during the 2018 Annual Meeting of Shareholders, which is scheduled on July 31, 2018.

Stock Performance Snapshot

May 21, 2018 - At Monday's closing bell, Xerox's stock slightly dropped 0.74%, ending the trading session at $27.98.

Volume traded for the day: 2.36 million shares.

After yesterday's close, Xerox's market cap was at $7.20 billion.

Price to Earnings (P/E) ratio was at 13.10.

The stock has a dividend yield of 3.57%.

The stock is part of the Technology sector, categorized under the Information Technology Services industry. This sector was up 0.7% at the end of the session.

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