Xerox said Wednesday that embattled CEO Jeff Jacobson will step down, giving a major triumph to billionaire Carl Icahn in his campaign against the company’s proposed merger with Fujifilm.
Jacobson — and most of the Xerox board — will resign to settle a lawsuit that Icahn and another major Xerox shareholder, Darwin Deason, brought to block the Fujifilm deal. Xerox will appoint six new directors, including Icahn Enterprises CEO Keith Cozza, who will become chairman of Xerox.
Icahn and Deason have campaigned against the proposed merger since it was announced in January, saying last month in a letter to shareholders that it was a “value-destroying transaction” and unveiling their own plan for creating shareholder value.
A New York judge last week issued an order enjoining the merger, agreeing with Icahn and Deason that Jacobson had been “hopelessly conflicted” in negotiating the deal.
“We believe Friday’s [court] decision and this [settlement] mark a watershed moment for corporate governance generally and for Xerox specifically,” Icahn said in a statement. “With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities.”
According to Xerox, the company’s new board will “begin a process to evaluate all strategic alternatives to maximize shareholder value, including terminating or restructuring Xerox’s relationship with Fujifilm and the proposed transaction with Fujifilm.”
Fujifilm, which saw its shares drop 5.5% in Tokyo on Wednesday, said it planned to file an objection to the settlement.
Under the terms of the merger, Xerox would shed its independence, with Fuji Xerox buying back Fujifilm’s 75% stake in the joint venture for about $6.1 billion and the Japanese company using the proceeds to acquire 50.1% of Xerox.
“Fuji — with the able assistance of Xerox CEO Jeff Jacobson — appears to have been successful in putting one over on the board of directors of Xerox,” Icahn and Deason wrote in their letter.
As part of the settlement, the two investors also agreed to drop their proxy fight to unseat Xerox’s leadership. Xerox’s board said it had determined that “an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders.”