Xerox saga's latest chapter finds board, CEO staying after agreement with Icahn, Deason expires

The two activist investors express outrage at board 'pursuing their own brazen self-interest'

color boxes for copier
Whether the printer and copier maker merges with Fujifilm remains to be seen

The ongoing melodrama at Xerox Corp. (NYSE: XRX) has taken another twist.

Actually, make that a U-turn.

Just when it looked as though current members of the Xerox board and the management team led by CEO Jeff Jacobson were headed out the door, Xerox announced they will remain in place because of the expiration of a settlement agreement the company had reached with activist investors Carl Icahn and Darwin Deason.

Icahn and Deason thought they had reached an agreement on Tuesday, May 1, with Xerox leadership to step down from their positions. However, Xerox announced Thursday night that the failure to execute certain unspecified stipulations in the agreement had resulted in the agreement expiring at 8:00 p.m. ET on 3 May.

"As a result, the current board of directors and management team will remain in place," Xerox said.

Icahn, Deason express outrage

The turn of events elicited an angry response from Icahn and Deason in what they called an open letter to Xerox shareholders.

The activist shareholders, who own about 15% of Xerox, said the board once again was guilty of "intentionally violating their fiduciary duties to Xerox shareholders by pursuing their own brazen self-interest."

The open letter also said that over the next few months, "we intend to see that 'massively conflicted' Jeff Jacobson and old guard directors like Bob Keegan, Ann Reese and Chuck Prince, who have already done so much damage to the company, and are continuing to do more damage with these actions, are held fully and personally liable for their misconduct."

Will Xerox, Fujifilm merge?

The lapsing of the agreement raises the question of whether a potential merger of Xerox and Fujifilm Holdings will proceed.

The two companies agreed in late January to a US$6bn deal that would merge the U.S. printer and copier maker into Fuji Xerox, an existing joint venture between Xerox and Fujifilm, according to Reuters. However, the news service said the deal soon ran into trouble after Icahn and Deason opposed it, saying the terms undervalued Xerox.

In its announcement Thursday night about the expiration of the settlement agreement, Xerox said its board and management "will consider all options to create value for the company and its shareholders." It was not more specific.

Reuters has reported that buyout firm Apollo Global Management LLC (NYSE:APO) has approached Xerox to express interest in a possible acquisition.

Quick facts: Xerox

Price: 21.09 USD

Market: NYSE
Market Cap: $4.18 billion

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