Fujifilm has counterpunched with its own statement, just hours after Xerox released a letter on Monday that threatened to back out of the Fuji Xerox partnership, and calling Fujifilm’s billion-dollar lawsuit a “ploy” to jump-start negotiations.
“Fujifilm believes that Xerox breached its agreements with Fujifilm by making a unilateral decision to terminate without legitimate cause the agreements to combine Fuji Xerox and Xerox,” Fujifilm wrote in its response. “We are confident that our assertion will be validated through the ongoing litigation.”
It is now open warfare between the longtime partners as they hope to win a battle for hearts and minds in the press, and a battle for damages in state and federal court.
“The letter from Xerox Corp. is the first time we have heard from Xerox since we filed a lawsuit against them last week,” Fujifilm said in the statement. “Nothing they said in the letter was surprising to us.”
Fujifilm sued Xerox last week in US District Court in Manhattan seeking more than US$1 billion in damages after the US copier backed out of a takeover attempt by Fuji.
In this morning’s letter, Xerox said it spurned a sale to Fujiflim due to an accounting scandal at Fuji Xerox, 75-percent of which is owned by Fuji. Xerox called it “massive” and “ongoing” fraud that permeated a key part of the sale, the transfer of 100 percent of Fuji Xerox to the American printer.
Fujifilm disputed Xerox’s assertion.
“Xerox's argument on Fuji Xerox's accounting issue is wrong,” Fujifilm said. “The accounting issue at Fuji Xerox is properly resolved and no longer exists. Moreover, we have completed the audit in all of Fuji Xerox’s operating companies in its territory, including China, by more than one auditing company.”
The business battle pits Xerox majority shareholders Carl Icahn and Darwin Deason against Fujifilm chairman and CEO Shigetaka Komori, who according to court filings has no love for the activist investor. The Xerox takeover was planned by Komori and ex-Xerox CEO Jeff Jacobson, and it was immediately opposed by Icahn and Deason who joined forces to fight it in the media and in state court.
The Icahn-Deason alliance won a legal victory on 27 April when a New York Supreme Court Justice Barry R. Ostrager signed an injunction that prevented the sale from happening. That injunction survived a challenge last week and remains in place. Then on 13 May, Jacobson and five board members resigned to make way for Icahn’s hand-picked successor, John Visentin. Several of the new board members also have ties to Icahn and Deason.
In Visentin’s open letter to Komori, he threatened to end Fuji Xerox when the contract was up in 2021, and sell products directly to the Asia Pacific market. But Fujifilm scoffed.
“It is again no surprise to hear Xerox’s pretense to sell its products directly into the growing Asia-Pacific market,” Fujifilm wrote. “However, realistically speaking, we believe that it would be extremely difficult for Xerox - which does not currently possess any marketing channel in Asia - to build its own channel from scratch.”