Xerox merger with Fujifilm blocked

The Fujifilm Holdings merger with US firm Xerox was temporarily blocked on Friday following a court ruling, handing its activist investors a win after they sued to stop the deal.

The ruling reopened nominations to Xerox’s board on Friday after investor Darwin Deason filed a lawsuit against the company in March opposing the deal and asking to add his own nominees to the board.

The preliminary injunction came a day after the companies reopened deal talks on their $6.1bn merger. They are discussing a higher price after Xerox, under pressure from top investors, asked to renegotiate the terms.

Judge Barry Ostrager of the Supreme Court of the State of New York, County of New York, granted the injunctions, saying Xerox CE Jeff Jacobson sought to conclude the deal despite being advised to end negotiations.

“The facts abduced at the evidentiary hearing clearly show that Jacobson, having been told on Nov[ember] 10 that the board was actively seeking a new CEO to replace him, was hopelessly conflicted during his negotiation of a strategic acquisition transaction that would result in a combined entity of which he would be CEO,” the court decision read.

The proposed merger is opposed by Deason and Carl Icahn, two of Xerox’s top shareholders, who have said the agreement dramatically undervalues Xerox.

Fujifilm said it would consider all options, including whether to appeal.