ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business Deals

Icahn tells Xerox shareholders to block 'tortured' Fujifilm deal

Merger proposal skewed in the Japanese group's favor, billionaire investor warns

Activist investor Carl Icahn isn't pleased with Xerox's planned sale to Fujifilm.   © Reuters

NEW YORK -- Activist investor Carl Icahn has come out against a proposed takeover of Xerox by partner Fujifilm Holdings, arguing that existing shareholders will never realize the full value of their stakes if the Japanese company goes ahead with the cash-free deal.

With a "tortured, convoluted structure," the transaction "dramatically undervalues Xerox and disproportionately favors Fuji," Icahn and fellow Xerox investor Darwin Deason write in an open letter to Xerox shareholders dated Monday.

The letter quotes a Nikkei Asian Review interview with Fujifilm CEO Shigetaka Komori, in which the chief executive says the deal "will allow us to take control of Xerox without spending a penny."

Icahn holds a roughly 9% stake in the U.S.-based company. The pair, calling themselves the two largest individual shareholders, exhorted other investors to vote against the deal.

"We urge you -- our fellow shareholders -- do not let Fuji steal this company from us," the letter reads.

Fujifilm Holdings CEO Shigetaka Komori   © Reuters

There "is still great opportunity for Xerox to create enormous value for shareholders, and it does not involve selling control to Fuji without a premium," the investors argue, calling for "freeing the company from the shackles of the Fuji Xerox joint venture." Their ideas include shifting Xerox's business portfolio toward software, security and services and refocusing its sales on small and midsize businesses.

In a deal announced Jan. 31, Xerox's board agreed to a transaction that would make it a 50.1%-owned Fujifilm subsidiary. Xerox, which would take control of and merge with the joint venture, is to pay a $2.5 billion special dividend to existing shareholders. In their letter, Icahn and Deason criticize this one-time payout as "financed with our own assets," as opposed to cash from Fujifilm. They also demand "complete and detailed disclosure" of the negotiations on the deal and Xerox's evaluation of the proposal.

Icahn and Deason appear to be holding out for better terms from Tokyo-based Fujifilm. But Xerox, the Japanese company's longtime partner, stood by the deal.

"A comprehensive review of strategic and financial alternatives conducted over many months by the independent members of the Xerox board of directors, in consultation with independent financial and legal advisers ... concluded that the combination with Fuji Xerox is the best path to create value for Xerox shareholders," the American company said in a statement responding to the letter.

Get unique insights on Asia, the most dynamic market in the world.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media