17 October 2018

Fujifilm wins appeal in battle with Xerox over aborted merger

Court overturns injunction won by activist investors in latest chapter of bitter feud between Fujifilm and Xerox.

A New York court has overturned preliminary injunctions requested by an activist investor that had blocked the planned merger Japan’s Fujifilm Holdings Corp and Xerox Corp.

Legal battles

Japan’s Fujifilm Holdings Corp has won an appeal in its legal battles with Xerox Corp. Xerox in May scrapped a $6.1 billion deal with Fujifilm in a settlement with investors Carl Icahn and Darwin Deason that also handed control of the U.S. photocopier giant to new management. The ruling by the New York State Appellate Court could give the Japanese firm leverage to bring Xerox management back to the negotiating table. Fujifilm is also suing Xerox in a separate U.S. suit that seeks well over $1 billion, accusing it of breach of contract in abandoning the deal. Xerox’s new management is opposed to the proposed merger, while Fujifilm said in a statement it stands by its view that the original planned merger remains the best option for the shareholders of both companies. The statement said the court’s decision ‘will allow us to discuss with Xerox the fulfillment of the original agreement. All Xerox shareholders ought to be able to decide for themselves the operational, financial, and strategic merits of the transaction to combine Fuji Xerox and Xerox.’

Not misled

The two companies agreed in January to a complex deal that would have merged Xerox into their Asia joint venture Fuji Xerox and given Fujifilm control, prompting Mr Icahn and Mr Deason to argue the US firm was being undervalued and launched a proxy fight. The New York court ruling found that Xerox’s former CEO Jeff Jacobson, accused by Mr Deason of negotiating the deal to save his own job, had neither misled or misinformed the board. The ruling stated, ‘the board, which engaged outside advisors and discussed the proposed transaction on numerous occasions prior to voting on agreeing to present it to the shareholders, did not engage in a mere post hoc review, nor was the transaction unreasonable on its face.’