NEW YORK (CN) – Embattled Xerox CEO Jeff Jacobson has agreed to resign over his role in the printing company’s proposed $6.1 billion merger with Fujifilm to settle the claims of a major shareholder who is hoping to renegotiate the transaction or pursue a better deal.
Tuesday’s announcement could imperil the deal that a New York judge had already enjoined after ruling Friday that Jacobson was “massively” and “hopelessly” conflicted because he had reached the deal with the Japanese partner to save his job.
Now, Jacobson and six members of Xerox’s board will step down, and the new board members who replace them could renegotiate the Fujifilm merger or sell the company to third parties to maximize value for shareholders, according to a law firm representing Xerox’s third-largest shareholder, Darwin Deason.
Deason and fellow shareholder and billionaire hedge fund manager Carl Icahn were strongly opposed to the proposed transaction that would have seen Fujifilm, also known simply 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 U.S. print firm. They said the deal was unfair to shareholders and undervalued the company’s assets.
Xerox said in a statement that the settlement agreement resolves Deason’s shareholder complaint filed in New York County Supreme Court in February. The agreement, however, does not end Deason’s claims against Fujifilm for aiding and abetting, according to the print company.
Icahn Enterprises chief Keith Cozza is slated to become Xerox’s chairman of the board of directors, and John Visentin is expected to take over as vice chairman and CEO, Xerox said.
In a statement, the current board of directors of Xerox said it was compelled to reach a settlement to end the litigation after Judge Barry Ostrager blocked the transaction with a preliminary injunction last week. That created “significant risk and uncertainty” and “potential instability and business disruption during a proxy contest,” the directors said.
“As a result, the Xerox board of directors determined that an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders,” the board said.
Icahn called Ostrager’s ruling a “watershed moment for corporate governance.”
“We believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm, our supposed ‘partner’ whose conduct over the last year is more unbelievable than what you see on fictional TV shows like House of Cards or Billions,” Icahn said.
Deason said he and Icahn would support Visentin, if he is elected CEO.
“I am confident the alternatives for Xerox and its shareholders will be fully and expeditiously maximized,” he said.
The court has until 8 p.m. Thursday to sign off on the agreement, Xerox said.