It didn’t take long for the other shoe to drop.
Fujifilm Holdings has taken Xerox to court, seeking more than $1 billion in damages for a breach of contract after the Norwalk, CT-based manufacturer announced it would no longer pursue the proposed merger between Xerox and Fuji Xerox, the Wall Street Journal reported. Fujifilm said the amount it is seeking reflects the lost benefit to its shareholders—well in excess of $1 billion, it alleges—along with punitive damages for Xerox’s “intentional and egregious conduct,” the newspaper said.
Fujifilm filed a federal lawsuit in the Southern District of New York, alleging Xerox illegally terminated the agreement between the two companies because of pressure brought about by Xerox shareholders Darwin Deason and Carl Icahn, who claimed the deal severely undervalued Xerox. The shareholders also alleged that former Xerox CEO Jeff Jacobson cut a side agreement with Fujifilm that would have enabled him to remain at the helm of the company.
In a statement obtained by the paper, Fujifilm claimed Deason and Icahn prevented the views of other shareholders from being heard. “It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15% of Xerox’s shares, to dictate the fate of Xerox,” the statement read.
Xerox said it will vigorously defend its decision and pursue all remedies arising from Fujifilm’s “mismanagement and misconduct,” the Wall Street Journal reported.
After weeks of legal sparring, the then-dissident shareholders and Xerox finally hammered out a peace accord on May 13, one that placed John Visentin as the new CEO of Xerox and added five new members to the company’s board of directors. Xerox also revealed that it was no longer pursuing the deal with Fujifilm in its current form, having received no response to its request for enhanced terms. Xerox also stated it would be seeking alternative options that would maximize shareholder value.
Among the reasons given by Xerox for killing the deal included Fujifilm’s failure to deliver the audited financials of Fuji Xerox by April 15.
In late May, Fujifilm COO Kenji Sukeno told attendees at an earnings briefing that the company would be pursuing legal remedies for the cancelation of the $6.1 billion merger. Sukeno claimed that Xerox had no legal basis to nullify the deal, but he noted that Fujifilm would entertain offers from Xerox’s new board of directors, but insisted that the terms benefit Fujifilm shareholders.
