Fujifilm Holdings Corp sued Xerox Corp on Monday for well over $1 billion, faulting the printer and copier company for succumbing to pressure from activist investors Carl Icahn and Darwin Deason in calling off a proposed merger.
In a complaint filed with the U.S. District Court in Manhattan, Fujifilm accused Xerox of breach of contract and engaging in “intentional and egregious conduct” in abandoning the $6.1 billion merger announced in January.
Icahn, the billionaire, and Deason together owned 15 percent of Xerox shares, and said the merger undervalued the Norwalk, Connecticut-based company.
“It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15 percent of Xerox’s shares, to dictate the fate of Xerox,” Fujifilm said in a statement.
The merger was scrapped on May 13 when Xerox, in a settlement with Icahn and Deason, agreed to install several new directors and replace Jeff Jacobson as chief executive with technology executive John Visentin.
Xerox also cited unresolved accounting issues as a reason to end the merger.
In a statement on Monday, Xerox said it remained “extremely confident” it had a contractual right to back out, and would seek remedies for Fujifilm’s “mismanagement and misconduct.”
A spokeswoman for Deason had no immediate comment. Icahn did not immediately respond to a request for comment. Xerox has been exploring strategic options, including transactions with other companies, but the lawsuit could force it to address Fujifilm’s grievances sooner.
A merger would have combined Xerox with the 56-year-old joint venture Fujifilm Xerox, in which Fujifilm and Xerox had stakes of 75 percent and 25 percent, respectively. Thereafter, Fujifilm would have owned 50.1 percent of Xerox’s common stock, and Xerox shareholders would have received a $2.5 billion special dividend.
Fujifilm had hoped the merger would deliver at least $1.7 billion of cost savings and $1 billion of new revenue annually. Its lawsuit also seeks punitive damages and a $183 million merger termination fee.
“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,” Fujifilm said.
Fujifilm has appealed an April 27 temporary injunction sought by Deason and granted by a New York state judge to block the merger. Deason, who had accused Jacobson of arranging the merger to keep his job, is still pursuing a lawsuit accusing Fujifilm of aiding and abetting breaches of fiduciary duty by Xerox’s old board. Fujifilm filed counterclaims on June 14.
Xerox shares closed down 17 cents, or 0.6 percent, at $27.24 on the New York Stock Exchange.
The case is Fujifilm Holdings Corp v Xerox Corp, U.S. District Court, Southern District of New York, No. 18-05458.
Africa has long been considered a continent with growth potential. Although this is the case, the question remains, is the continent developing at a sustainable rate?
According to World Bank statistics, intra-African trade was at just 11% of the continent’s total trade between 2007 and 2011. In 2015, intra-African trade was worth just $170 million, when the potential stands at trillions of dollars .
While intra-African investment is critical to Africa’s future economic growth, it still remains significantly low despite the positive results it can yield. Intra-African trade fails because of volatile political climates and governance challenges in some countries. Potential trading partners cannot collaborate because of jurisdiction red tape.
Intra-African trade is essential so that African countries can do business with each other frequently in order to grow the economies of the continent and raise Africa’s global competitiveness. Recently, I attended the Africa CEO Forum, an event which seeks to find future solutions for the benefit of the continent’s development by bringing together governments and industry captains to engage on what is possible and intra-Africa trade was a topic in which many were interested and dominated the conversations in some of the sessions and hallways.
While Africa is often an overlooked investment target for many global multinationals as a result of infrastructure and policy challenges, it is upon businesses that are Africa born to reinvest in the continent. I have always believed in the opportunity that exists in Africa and that is the reason why we, at Tsebo Solutions Group have implemented a robust plan that has seen us build the business relationships we have on the continent. Although we believe that African economies will continue to grow despite the various market challenges, governments can catalyse easier trading practices to alleviate the burden of governance issues and border control challenges that many countries on the continent still face.
The World Bank forecasts growth of 3.2% for the year, up from 2.4% in 2017. It also predicted slightly higher growth for 2019 of 3.5% . This provides a window of opportunity for businesses to strengthen trade
relationships with counterparts on the continent to build sustainable trade. As an African business, we saw the need to focus on harnessing the power of doing business on the continent, not only to cement our footprint as a facilities management provider that understands Africans, but to support and strengthen the growth of the continent.
Intra-African investments are critical to Africa’s future economic growth as it creates greater opportunities to uplift the people of Africa as it has more of a direct impact on poverty by creating more job opportunities for the poor. Tsebo Solutions Group employs over 39 000 staff and more than 50% of the business’ turnover is fed back to our staff in wages. This has created a unique opportunity to not only grow our service delivery capabilities in Africa, but to uplift people across the continent.
However, it is important to note that expanding into Africa requires a deep understanding of the countries and their unique characteristics.
As a business, we believe that we can only reach our full growth potential by continuing with our Africa journey. With a customer base of nearly 1 billion people in Africa, the continent is set to grow only if African business continue to trade with each other and governments realise the importance of the private sector in opening growth opportunities.
Clive Smith, Chief Executive Officer, Tsebo Solutions Group