Partners Relieved As Xerox Reportedly Rejects Donnelley Merger Proposal

Partners are expressing relief after Xerox reportedly turned down a plan to merge its document technology business with R.R. Donnelley & Sons.

According to a Wall Street Journal report, citing people familiar with the matter, Xerox's board rejected the proposal to combine the companies because it posed a higher risk than Xerox’s current plan to split its business process outsourcing operations and its traditional document technology business.

Guy Baroan, founder and president of Xerox partner Baroan Technologies, in Elmwood Park, N.J., said he was pleased to hear that Xerox was said to have rejected the idea.

[Related: Partners Applaud Xerox Decision To Keep Its Name For Post-Split Products Business]

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’I didn’t think it was a great fit and I don’t know what [Xerox] was going to gain from it,’ he said, noting that Donnelley’s focus on services for clients would complicate Xerox’s new document technology business.

That business will retain the Xerox name, while the business process outsourcing division will be spun off and be named Conduent.

’I’m pleased. Now I know where the focus is going to stay, Now I know that their focus is going to go into the channel,’ Baroan said.

Josh Justice, president of Waldorf, Md.-based Xerox partner Southern Solutions, said that although he doesn’t know how a potential Xerox-Donnelley merger would have affected him, he's happy that Xerox will continue to focus on its planned split and the channel.

’The new document technology business is going to be focused on what I am focused on, and I am excited about how things are now,’ Justice said.

Xerox, based in Norwalk, Conn., did not respond to a request for comment Friday afternoon before this story was published.

According to the WSJ report, the proposal from Donnelley called for several hundred million dollars in new cost cuts and stipulated that Donnelley’s executives be left in control of the new company.

In January, Xerox announced it would split into two companies, and took big steps toward the separation in June when it named the CEOs of both companies.

Xerox -- whose Global Services business is ranked No. 9 on CRN's Solution Provider 500 list - has named Jeff Jacobson, currently president of the document technology business, to be its CEO after the split, while Ashok Vemuri will lead Conduent, which last year took in $7 billion in revenue as a division of Xerox.

Ursula Burns, the current CEO of Xerox, will be chairman of the document technology business.

Although some members of the two companies’ boards have yet to be named, Xerox last month announced that activist investor Carl Icahn – who purchased more than 7 percent of Xerox’s stock weeks before the company’s decision to split - had placed Icahn Partners’ managing director Jonathan Christodoro on the Xerox board. Following the split, Christodoro will continue to serve on the board of the new Xerox and will not fill one of the three seats Icahn was guaranteed on that board in January.

Donnelley, for its part, is undergoing a split of its own, which it announced in August 2015.

The Chicago-based print company is now moving forward with that three-way split, which would have been nullified had Xerox accepted the merger proposal.

Donnelley said it's looking to complete its split by the end of this year.