Another week, another twist in the battle between Xerox and its investors Darwin Deason and Carl Icahn, as the Xerox board has now abandoned the deal it announced last week with the two shareholders.
That settlement would have seen CEO Jacobson and six other directors resign with a new CEO, John Visentin, a consultant associated with Icahn taking over. However, this deal depended on assurances that there would be no further legal action taken against Xerox or the resigning board members.
Icahn and Deason released an open letter stating that such assurances were made, noting: “An expansive release from us and the Company was not enough. Fully insured, robust indemnification rights were not enough. The Xerox Board declined to take the actions they unanimously approved as in the best interest of Xerox shareholders unless they obtained additional unprecedented protections from the court, which all parties (and the judge!) agree are not required under applicable law.”
Instead, Xerox has filed an appeal against the court decision that temporarily blocked the sale to Fujifilm. The company issued a statement that said: “Xerox strongly believes that the decision is contrary to well-established New York law vesting the Board of Directors of Xerox with the business judgment to enter into the transaction agreement with Fujifilm (the “Transaction”) and that the decision to approve should rest with Xerox’s shareholders, not the Court.”
Xerox restated its intention to continue with the sale to Fujifilm. However, a second buyer also emerged last week, with reports that a venture capital firm, Apollo Global Management, was interested in acquiring Xerox. Apollo had previously funded two of the companies that Visentin had worked at. This deal appears to depend on Visentin taking over as CEO.
Meanwhile, Icahn and Deason have accused the Xerox board of being “reckless” and self-interested, vowing to fight on and claiming to have the backing of many of their fellow shareholders. Their letter concludes: “Over the next few months, we intend to see that “massively conflicted” Jeff Jacobson and old guard directors like Bob Keegan, Ann Reese and Chuck Prince, who have already done so much damage to the company, and are continuing to do more damage with these actions, are held fully and personally liable for their misconduct. Similarly, we intend to see that Fujifilm is held fully liable as an aider and abettor of the continuing breaches of fiduciary duties by those directors.”