Xerox to repurchase $542 million of shares

Xerox Holdings Corporation is repurchasing all of the shares of the Company’s common stock beneficially owned by Carl C. Icahn and certain of his affiliates. The price agreed was $15.84 per share, which was the closing price of Xerox’s common shares on September 27, 2023, the day before Xerox began repurchasing the shares. The deal is expected to close today, 29th September.

In total this has cost Xerox roughly $542 million, which it will fund with a new debt facility. Once completed, none of Icahn’s associates will hold any Xerox shares. Consequently, Jesse Lynn, general counsel for Icahn Enterprises, and Steven Miller, a portfolio manager for Icahn Capital, as well as James Nelson, an independent director, will resign from the Company’s board of directors. Following this, Scott Letier, who has served on the board since 2018, will become chairman of the Xerox Board of Directors effective upon the closing of the repurchase transaction.

Steve Bandrowczak, Chief Executive Officer of Xerox, commented: “Our decision to repurchase shares is reflective of the confidence we have in our business, our strategy and our ability to improve Xerox profitability and cash performance.”

However, it is hard to see anyone really benefitting from this. Icahn has had to accept the current share price though the shares were at one time worth considerably more. At the same time, Xerox has had to borrow money to buy Icahn out. 

Xerox’s most recent financial update was its Q2 report from July this year, which suggests that this was not the ideal time to be taking on unnecessary debt. The figures showed that revenues were up slightly year on year from $1,747 million to $1,754 million. However, the pre-tax loss ballooned from $5 million to $89 million. Revenue from the print segment remained more or less static from year to year though the FITTLE equipment financing segment did see an improvement from $96 million to $101 million. The company predicted that revenue would remain flat for the rest of the year. 

Icahn has been Xerox’s largest shareholder. He said: “As a longtime shareholder of Xerox, I’ve watched this iconic brand endure the hardest of times and come out stronger, all while returning substantial amounts of capital back to shareholders. I helped Xerox maintain its independence while pursuing consolidation within the print industry. I will continue to be a champion of the company and hope my activism will long be remembered as Xerox continues its positive momentum.”

Icahn is sometimes referred to as an activist investor, which sadly has nothing to do with the Greta Thunberg style of selfless protest to save the planet, but is more about using the influence that comes with his shareholding to manipulate the company involved to generate more wealth for shareholders including himself. In banking circles, this sort of behaviour is regarded as a good thing, which explains a lot about what is wrong with western capitalism. 

Bandrowczak added: “For nearly a decade, Carl and his affiliates have served as important shareholders to Xerox, providing invaluable counsel, guidance and activism to support our evolution as a workplace technology leader. On behalf of Xerox and the board of directors, I would like to thank Carl and our departing directors for their dedication to Xerox and for contributing to our past, present and future success.” 

This brings to an end a tumultuous time in Xerox’s recent history. This started with the sensible decision to split off the business process outsourcing services into a separate company as Conduent. However, that was followed a year later by a proposal for Fujifilm to take over Xerox. Icahn led a shareholder revolt, backed up by several lawsuits, to stop the deal that eventually gave him considerable control over the board of directors but ultimately put an end to the Fuji Xerox joint venture.

This was then followed by an attempted hostile takeover of HP, which Xerox abandoned when the CoVid pandemic struck. It can’t have helped that last year the Xerox CEO Jon Visentin, who was very much Icahn’s man, passed away. So it’s perhaps no surprise that Icahn has decided to move on to richer pickings elsewhere. He has already sold his shares in HP though he took advantage of a dip in the value of Xerox shares last year to buy more Xerox stock. 

Meanwhile, Xerox has had a sluggish recovery following the turmoil that everyone experienced in the pandemic. The company is making cutbacks amidst restructuring, having ceded control of its PARC R&D facility and sold off its 3D printing business, as well as apparently giving up its slot at next year’s Drupa show. So the next set of Q3 figures should make for interesting reading.

In the meantime, you can find further details from xerox.com.


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