FujiFilm Sue Xerox Over Botch Merger
Fujifilm Holdings is suing Xerox Corp whose local subsidiary has been plagued by scandal for breach of contract, after a takeover deal went pear shaped.
FujiFilm is seeking estimated damages of more than $1 billion after the US Company cut a deal and bolted following a side deal with US activist investors Carl Icahn and Darwin Deason last month both men have been described as Corporate bullies.
Back in January, Xerox cut a merger deal with Fujifilm, which would have traded Xerox’s 25% ownership of their 60-year joint venture to Fujifilm for 49.9% of a new company that would have combined all of Xerox with the joint venture. Xerox shareholders would also have been paid $2.5 billion in aggregate via a special dividend.Fujifilm claim Xerox unlawfully terminated an agreement to combine with Fuji Xerox, a joint venture between the two companies, due to pressure from Messrs. Icahn and Deason, who argued the deal undervalued Xerox.
Japan-based Fujifilm said by settling with the activists, Xerox prevented other shareholders from having a say on the deal.
“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,” Fujifilm said in a statement.
Xerox said in a statement it remains “extremely confident” its actions were valid. “Xerox will vigorously defend its decision and pursue any and all remedies available to Xerox arising from Fujifilm’s mismanagement and misconduct,” the company said.
Messrs. Icahn and Deason didn’t immediately respond to requests for comment.
Fujifilm said it is seeking an amount that reflects the lost benefits to Fujifilm shareholders, which it estimates to be “well in excess of $1 billion,” and punitive damages for Xerox’s “intentional and egregious conduct.” The lawsuit notes that the merger was expected to deliver at least $1.7 billion in annual cost savings and revenue expansion opportunities of at least $1 billion.
The activists have said Xerox could be sold to a competitor or a private-equity firm and is worth significantly more than the Fujifilm deal had valued it. Fujifilm said in the complaint it doesn’t appear that Xerox has received any superior bids since the agreement was announced.