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Business deals

Xerox shareholders stay silent, dashing Fujifilm's hopes of deal

Japanese company had banked on support at general meeting

A Fuji Xerox photocopier. Japan's Fujifilm had hoped some stakeholders in joint venture partner Xerox would push to reinstate their deal for a takeover.
A Fuji Xerox photocopier. Japan's Fujifilm had hoped some stakeholders in joint venture partner Xerox would push to reinstate their deal for a takeover.   © Reuters

TOKYO -- Xerox stakeholders failed to speak up in favor of an acquisition by longtime partner Fujifilm Holdings at a general meeting Tuesday, dimming the Japanese company's prospects of fighting the activist investors opposing the deal.

The Tokyo-based photography and imaging company's focus now shifts to appealing an injunction placed on the deal in April by a U.S. court. Under the original agreement, the American office machine maker would have taken over joint venture Fuji Xerox, and Fujifilm would have taken a majority stake in the merged company. Hearings on the appeal are set to begin in September.

When the deal was first announced in January, Fujifilm expected to win approval at the shareholders meeting, which was seen taking place as early as June. But the Supreme Court of the State of New York temporarily froze the acquisition after U.S. shareholder Darwin Deason, an ally of activist investor Carl Icahn, sued to stop it.

A number of Xerox board members -- including then-CEO Jeff Jacobson -- were replaced with executives backed by Icahn's team. In May, the U.S. company backed out of the sale.

Nevertheless, Fujifilm CEO Shigetaka Komori has maintained that other stakeholders want the purchase to go through. Icahn's team holds combined voting rights of only around 15%. Moreover, Xerox shares have fallen about 20% since April.

But the deal was not mentioned in any of the proposals put forward Tuesday. The sole shareholder who spoke up mentioned the acquisition, but confined his comments to issues like corporate governance and the disappointing performance of Xerox stock.

The injunction imposed in April came about as a result of what were seen as improper negotiations involving Jacobson regarding the deal. Fujifilm argues the purchase was on the level and had unanimous support from both companies' boards. In September's appeal, it will need to refute Xerox's claims that the Japanese company failed to hand over audited financials for Fuji Xerox in a timely manner.

If the freeze is lifted, Fujifilm could seek legal measures to have Xerox stick to the contract.

Xerox management continues to oppose Fujifilm on multiple fronts, such as refusing to renew an agreement on the respective operating territories of the U.S. company and Fuji Xerox by the 2021 deadline.

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