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Xerox Set To Resume Negotiations With Fujifilm, Moves To 'Set The Record Straight' In Shareholder Battle With Icahn

O'Ryan Johnson

Xerox's board of directors Wednesday fired back at activist investors Carl Icahn and Darwin Deason as part of a campaign to set the "record straight" as it moves to resume merger negotiations with Fujifilm.

Xerox said since it entered into a settlement with Icahn and Deason a week ago "our shareholders spoke clearly and expressed their views about Xerox's prospects under an Icahn/Deason regime."

"Xerox's share price fell over 12 percent and in our conversations with our long-term investors, it became obvious that a number of them were strongly averse to the settlement terms that we entered," said Xerox.

In an eight page letter to shareholders, Xerox said it is now doing what is best for the company and all of its investors including driving its operational and financial performance. The company said it will continue to explore options to maximize shareholder value, including securing an increase in consideration from Fujifilm. In addition, the company said it will reopen the nomination process for director candidates.

"Your Board remains fully committed to doing everything we can to maximize shareholder value and acting in the best interests of all Xerox shareholders," the letter stated. "We thank you for your support, and we commit to keeping all of our stakeholders informed of developments as we move forward."

The Xerox decision to kill the settlement with Icahn and Deason is the latest turn in a fight that stems from the January 31 unveiling of an agreement between Fujifilm and Xerox under which Xerox would cede a 50.1-percent ownership stake to Fujifilm. Under the deal, Xerox shareholders would receive a $2.5-billion special cash dividend and 49.9 percent of the combined company, with Fujifilm owning 50.1 percent.

Icahn and Deason have maintained the deal represents a poor value for shareholders. Deason sued Xerox in New York state court and on April 27 won an injunction that both prevented the sale, and stopped shareholders from voting on it. Xerox then appeared to cave to pressure last week and consent to the ouster of CEO Jeff Jacobson and six board members. But the settlement fell apart and Jacobson remained in place. Xerox is appealing the injunctions.

Xerox said Icahn and Deason pledged to "go to war’ unless Xerox terminated its proposed combination with Fuji Xerox immediately." The company said it "refused to be pressured" into terminating the Fuji deal without "careful deliberation and analysis."

"Based on these developments, we concluded that it was in our shareholders’ best interests to allow the settlement to expire in accordance with its terms," the company said in a statement
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