Japanese firm Fujifilm filed a lawsuit in a district court in New York on Monday 18 June 2018, seeking “punitive damages for Xerox’s intentional and egregious conduct” in cancelling the fairly complex agreement that would have merged all of Xerox in the two companies’ existing joint venture entity Fuji-Xerox. Fujifilm wants more than US$ 1 billion from Xerox for backing out of a merger between the two companies.
The US$ 1 billion amount Fujifilm is seeking is significantly higher than the US$ 183 million ‘termination fee’ the companies agreed on in case one of them walked away from the agreement. Fujifilm is arguing that Xerox has deprived it of the benefits of the mutually agreed deal and is also demanding that Xerox be ordered to pay the US$ 183 million termination fee.
In the works for the past year, the deal was and announced at the end of January 2018. Since then, Xerox investors Carl Icahn and Darwin Deason who own 15% of Xerox stock between them, have gone to court to block the deal and vociferously opposed it, saying it undervalued the company. Xerox shares have recently come down from US$ 30 to about US$ 27 a share while Icahn and Deason have consistently indicated that they are looking for a value of US$ 40 a share.
After the disruption of the deal Xerox has seen a huge change in its board composition with CEO Jeff Jacobson the main architect of the deal stepping down along with five other board members. Xerox has said in a statement that it was “extremely confident” about its right to back out of the deal. It said it would seek remedies for Fujifilm’s “mismanagement and misconduct.”
Fujifilm’s statement says that it continued to believe that its takeover of Xerox was the “only correct solution” for investors in both companies. “It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15% of Xerox’s shares, to dictate the fate of Xerox,” the company added.
Here are the links to other articles from Fujifilm-Xerox saga:
Episode 6 – Fujifilm to ask a judge to enforce Fujifilm Xerox merger
Episode 5- Fujifilm to sue Xerox to enforce acquisition agreement
Episode 4 – Xerox board walks away from Fujifilm deal
Xerox investor’s lawsuit targets CEO Jeff Jacobson
