Darwin Deason, the Xerox shareholder who took the company to court to stop its sale to Fujifilm, appears to have won a significant victory over the company. Xerox has abandoned its plan to appeal last week’s legal decision and instead come to an agreement with Deason and his fellow investor Carl Icahn.
The central element of Deason’s lawsuit was his attempt to re-open the nominations for new directors to the Xerox board ahead of this year’s annual meeting of shareholders. Under this new agreement the Xerox CEO Jeff Jacobson has resigned, as well as the chairman of the board, Robert Keegan. Five other directors – Charles Prince, Ann N. Reese, William Curt Hunter, Sara Martinez Tucker and Stephen H. Rusckowski – have also resigned.
Xerox has appointed six new board members, including Keith Cozza, CEO of Icahn Enterprises, who is expected to be elected chairman of the Xerox board of directors. In addition, John Visentin, who has a track record in managing business units in IT companies including HP and IBM, and has acted as a consultant to Icahn, takes over as CEO of Xerox and vice chairman of the board. The other new directors are Nicholas Graziano, Scott Letier, Jay Firestone and Randolph Read.
Deason will give up his efforts to nominate further directors. He commented: “The future for Xerox is extremely bright. With John Visentin at the helm, receiving support and guidance from Carl Icahn and me, I am confident the alternatives for Xerox and its shareholders will be fully and expeditiously maximized. John is the right leader at the right time for Xerox.”
The new board will immediately evaluate the options around Xerox’s relationship with Fujifilm, which suggests that both the existing Fuji Xerox joint venture and the proposed sale to Fujifilm are all up in the air.
Xerox commented on this arrangement: “Following the court’s decision last week to enjoin Xerox’s proposed combination with Fuji Xerox, the Board considered the significant risk and uncertainty of a prolonged litigation, during which the company would be prohibited from negotiating with Fujifilm, as well as the potential instability and business disruption during a proxy contest. As a result, the Xerox Board of Directors determined that an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders.”
This arrangement paves the way for Xerox to now examine Icahn’s proposal to turn Xerox around by realising more value from its own intellectual property.
Icahn himself said that it was an exciting time to be a Xerox shareholder, adding: “We believe Friday’s decision and this agreement mark a watershed moment for corporate governance generally and for Xerox specifically.”
Deason still has an ongoing claim against Fujifilm, which is not affected by this arrangement. Fujifilm has said that it has “serious concerns” about this plan and that it intends to appeal last week’s court ruling, adding: “We also believe that the Xerox new board of directors has an obligation to comply with the agreements which were unanimously approved on January 30, 2018 (US time) and signed by both companies on January 31, 2018.”
This saga is unlikely to end here though it does appear that there’s little chance of Fujifilm now taking over Xerox at least not without substantially more money being offered.