FUJIFILM SUES XEROX US$1b FOR ABORTED DEAL

US activist investors caused US$6.1b takeover to fail, says Japanese company

FUJIFILM Holdings Corp accused Xerox Corp of caving to the whims of Carl Icahn and Darwin Deason in backing out of a US$6.1 billion (RM24.4 billion) takeover deal.

Fujifilm sued Xerox on Monday in federal court, here, over the failed takeover, seeking more than US$1 billion in damages. Xerox walked away from the deal on May 13.

“This change of heart is undoubtedly due to external pressures,” said Fujifilm in the complaint.

“Xerox has recently been subject to the whims of activist investors Carl Icahn and Darwin Deason, who notwithstanding their minority ownership of Xerox shares, have yanked the Xerox board in more directions than can be counted.”

Xerox said in a statement that it’s “extremely confident” the former board acted correctly in terminating the transaction, “due to, among other things, the continuously expanding unresolved accounting issues at Fuji Xerox”, the companies’ joint venture.

Icahn and fellow billionaire Deason had argued the Fujifilm offer undervalued Xerox. The pair, who collectively held about 13 per cent of Xerox, reached a settlement with the company after months of public fighting over the merits of the Fujifilm transaction.

Under the terms of the settlement, Xerox pulled out of the Fujifilm deal and Keith Cozza, chief executive officer (CEO) of Icahn Enterprises, became the company’s chairman. John Visentin replaced Jeff Jacobson as Xerox’s CEO.

The newly-filed suit and other litigation might drive Xerox bonds into junk territory, said Robert Schiffman, Bloomberg Intelligence senior credit analyst, and Mike Campellone in a note on Monday.

“If a white-knight strategic buyer doesn’t emerge, non-investment grade rating action risk looms large,” said the analysts.

Moody’s rated Xerox’s debt “Baa3”, the lowest investmentgrade rating.