Fujifilm said it plans to object in court to an agreement between Xerox and activist shareholders that is expected to lead to the resignation of CEO Jeff Jacobson and six board members.
"We have serious concerns about the announced settlement and we intend to file our objections with the Court shortly," Fujifilm said in a statement early Wednesday. "We believe the combination of Xerox and Fuji Xerox is the best option to provide exceptional value to shareholders of both companies."
Under the settlement announced late Tuesday between Xerox, activist investors Carl Icahn and Darwin Deason, Xerox's board would add six new members, with both the new chairman and new vice chairman being closely aligned with Icahn Enterprises. The new board plans to meet immediately and begin a process of evaluating all strategic alternatives, including terminating or restructuring the transaction with Fujifilm.
The agreement between Xerox and the activist shareholders will only become effective if a New York Supreme Court Judge (which is the lowest level of court in New York state) discontinues the lawsuit by Deason against Xerox. If the court fails to act by 8 p.m. ET Thursday, the agreement between Xerox and the activist shareholders will automatically terminate.
The settlement between Xerox and the activist shareholders doesn't affect any claims made in a related lawsuit by Deason.
Xerox agreed in late January to cede a 50.1 percent ownership stake in the company to Fujifilm in exchange for a $2.5 billion special cash dividend to Xerox shareholders and a 49.9 percent in the combined company. But a New York judge Friday granted an injunction against the merger, ruling that Xerox and Fuji had not disclosed some important parts of their decades-old joint venture to the public.
Specifically, the judge said a "lock-up" provision wasn't disclosed that "restricted Xerox from selling more than 30 percent of its equity to a competitor of Fuji without suffering significant economic dislocations." Fujifilm said in its early Wednesday statement that it plans to appeal the court ruling.
Xerox declined to comment on Fujifilm's plans. Fujifilm's stock fell $2.17 (5.46 percent) to $37.55 per share in trading on the Tokyo Stock Exchange Wednesday. Meanwhile, in pre-market trading Wednesday, Xerox's stock is up 16 cents to $32.45 per share and Icahn Enterprise's stock is down 50 cents to $67.10 per share.Icahn and Deason – two of Xerox's three largest individual shareholders – have objected to the proposed takeover of the company by Fujifilm.
As part of the agreement between Xerox and the activist shareholders, Jeff Jacobson would be replaced as Xerox CEO by John Visentin, who has served as a senior consultant to Icahn Enterprises since March. Icahn Enterprises CEO Keith Cozza would become Xerox's chairman of the board.