NORWALK, Conn. (CN) – After a period of uncertainty that has included a court injunction and the resignation of its chief executive officer, Xerox announced Sunday that it terminated a proposed $6.1 billion merger with Fujifilm, a deal that investors said undervalued the U.S. print firm.
Citing Fujifilm’s refusal to promptly enter into renewed negotiations after the departure of Xerox CEO Jeff Jacobson earlier this month, the company said that it had been forced to abandon the deal in the interests of its shareholders.
Jacobson’s resignation came after New York County Supreme Court Judge Barry Ostrager blocked the transaction with Fujifilm on April 27, ruling that Jacobson was “massively” and “hopelessly” conflicted and had reached a deal with the Japanese company to save his job.
The Xerox board said in a statement Sunday that it had made several requests over the past few weeks to open new negotiations with Fujifilm for improved terms.
“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,” the board said in a prepared statement.
Xerox said it was ending the deal because Fujifilm had failed to deliver the audited financials of Fuji Xerox by an April 15 deadline and because of “other circumstances limiting the ability of the company, Fujifilm and Fuji Xerox to consummate a transaction.”
The print firm announced on May 1 that Jacobson would step down and the company appointed five new members to the board. John Visentin is slated to become the new vice chairman and CEO of the company.
Darwin Deason and fellow shareholder and billionaire hedge fund manager Carl Icahn sharply criticized the proposed transaction that would have seen Fujifilm, also known as Fuji, merge with Xerox without paying contributing cash. Fuji would have owned just over half of Xerox.
Between them, Deason and Icahn hold a 15 percent share of the print firm. They attacked the deal as undervaluing the company’s assets.
Though a settlement agreement resolves Deason’s shareholder complaint against Xerox filed in New York County Supreme Court in February, his claims against Fujifilm for aiding and abetting are still pending.