NEW YORK/TOKYO (Reuters) - Xerox Corp (XRX.N) said its CEO and most of its board will step down to settle a suit brought by shareholders Carl Icahn and Darwin Deason, with
new management planning to look at restructuring or terminating a contentious deal with Fujifilm Holdings (4901.T).
The departures come after Icahn and Deason, who together hold 15 percent of Xerox, won a court order to temporarily block a planned $6.1 billion deal to combine the U.S. printer and copier maker into an existing joint venture, Fuji Xerox.
The settlement averts a proxy fight at an upcoming shareholder meeting and Icahn and Deason have agreed to withdraw the directors they had previously nominated.
Keith Cozza, CEO of Icahn Enterprises, will become Xerox’s chairman while John Visentin, who had previously led Novitex Enterprise Solutions, will become CEO, Xerox said in a statement.
Fujifilm, which saw its shares drop 5.5 percent in Tokyo trade on news of the ouster, said in a statement it planned to file an objection with a court over Xerox’s settlement with Icahn and Deason. It will also appeal last week’s court ruling temporarily blocking the deal.
Xerox’s new board had an obligation to comply with agreements that were approved in January, it added.
The court battle - a rare way for activist shareholders to block a deal - resulted in a New York judge agreeing last week that CEO Jeff Jacobson had been “hopelessly conflicted” when he was negotiating the deal as he had been told the board was actively seeking someone to replace him.
In addition to Jacobson, six others of the 10-member board will step down, Xerox said in a statement, adding that it had decided to settle given the risks and uncertainty of prolonged litigation.
New CEO Visentin had previously been hired by Icahn to assist him in fighting Xerox. He had also been a candidate under consideration by the old board to replace Jacobson as recently as last year, according to court documents.
Icahn and Deason had long argued that the deal with Fujifilm undervalued Xerox.
“We believe Friday’s decision and this agreement 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, including restructuring its relationship with Fujifilm,” he said.
The Fuji Xerox joint venture, 75 percent owned by Fujifilm and 25 percent by Xerox, has struggled with slow demand for office photocopying products.
As more businesses go paperless, Fujifilm has looked elsewhere for growth, expanding in biotechnology and healthcare.
Masayuki Otani, chief market analyst at Securities Japan, said the latest developments meant Fujifilm’s deal with Xerox was now “not very forward looking”.
“I think they might be better off putting their energies into the medical business,” he said.
Shares in Xerox were flat in after-hours trading, giving the U.S. company a market value of about $8.2 billion.
While shareholders claims against Xerox have been dropped, Deason will continue seeking claims against Fujifilm, a New York court filing showed.
Reporting by Liana Baker and Ritsuko Ando; Additional reporting by Alison Frankel in New York, Sam Nussey in Tokyo and Ismail Shakil and Subrat Patnaik in Bengaluru; Editing by Edwina Gibbs