Xerox has backed out of a deal with Fujifilm Holdings and announced that CEO Jeff Jacobson as well as five board members have resigned in the latest and seemingly final maneuver in a tumultuous battle with activist investors Carl Icahn and Darwin Deason.
Xerox's reversal of course is an unmitigated win for Icahn and Deason -- two of the company's largest shareholders -- who have been fighting the proposed buyout, and lambasting Jacobson's management, since January.
It brings about a conclusion that was foreshadowed earlier this month when the company said in a similar announcement 1 May that Jacobson and six board members were resigning as part of a settlement with Icahn and Deason, but then three days later said they were staying put because the deal had expired.
In a seven-page letter released Sunday afternoon, Xerox explained why it has finally decided to kill the deal.
"Over the past several weeks, the Xerox board has repeatedly requested that Fujifilm immediately enter into negotiations on improved terms for a proposed transaction," the outgoing Xerox board said in a statement.
"Despite our insistence, Fujifilm provided no assurance that it will do so within an acceptable timeframe. The Xerox board believes that the transaction cannot reasonably be expected to be completed under these circumstances, particularly given the court's injunction of the transaction and the lack of shareholder support for the transaction on current terms, as well as the unresolved accounting issues at Fuji Xerox."
Expanding on the "accounting issues," Xerox said Fujifilm failed to deliver audited financials by an 15 April due date, and there were "material deviations" between the audited and unaudited figures of Fuji Xerox. According to the letter the deal died at 5:00 PM ET on Sunday.
Stepping down from the board are Robert Keegan, Charles Prince, Ann N. Reese, William Curt Hunter, and Stephen Ruskowski. Jacobson also resigned from his role on the board.
Five new board members have already been named, Xerox said, and John Visentin -- a senior consultant to Icahn Enterprises and channel veteran who served as chairman of Presidio from 2015 to 2017 -- is expected to be named CEO.
"The new Board of Directors plans to meet immediately and, among other things, begin a process to evaluate all strategic alternatives to maximise shareholder value," Xerox said in the letter.
This is nearly identical to a deal that the two sides had worked out two weeks ago. That deal collapsed days later, however, and saw the return of the Xerox board, the CEO, and the negotiations with Fujifilm. Unlike the last arrangement, which hinged on a judge approving a settlement agreement, this one has no such caveat.
As part of the agreement, Icahn and Deason, have plan to settle their lawsuits against Xerox and Fujifilm. The pair must also withdraw the nominations of any other candidates for the board. There will be an election for open board seats at the 2018 annual shareholder meeting, but no date for that event has been set.
"We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm," Icahn said in a statement.
"With that behind us and new shareholder-focused leadership in place, today marks a new beginning for Xerox. We have often said that the most important person at a company (by far) is the CEO. We are therefore also pleased that John Visentin, a tried and true veteran in this area, will be taking the helm.”