(CN) – Carl Icahn and Darwin Deason, billionaire businessmen who together control more than 15 percent of Xerox, called for the immediate replacement Monday of the copier giant’s CEO.
News of a potential shakeup at Xerox has been been swirling for the past month, but The Wall Street Journal broke the story Sunday that Icahn and Deason had formed an alliance to encourage the company’s sale.
For the last five decades, Xerox owned 25 percent of a joint venture with Fujifilm that accounts for nearly half of the latter company’s overall operating profit.
Though the the joint venture Fuji Xerox saw an operating profit of about $750 million on sales of $10 billion in March 2017, CNBC reported that the declining demand for office printing has limited prospects for future growth.
Icahn and Deason, who are Xerox’s first and third biggest investors, respectively, told fellow shareholders Monday that CEO Jeff Jacobson belongs to a so-called old guard that is incapable of “prevent[ing] the Xerox ship from sinking.”
“We implore the ‘old guard’ directors – who have historically lacked the intestinal fortitude to challenge and demand accountability from Xerox management – to not do us all the tremendous disservice of allowing Jeff Jacobson to lead the negotiations,” Icahn and Deason said.
“He is neither qualified nor capable of successfully running this company, let alone negotiating a major strategic transaction that will do more than save his own job,” they added,
Jacobson has held the CEO title for only the past year, replacing former CEO Ursula Burns after the planned split between Xerox and services giant Conduent.
Xerox had little comment on Icahn and Deason’s collaboration. “The Xerox Board of Directors and management are confident with the strategic direction in which the company is heading and we will continue to take action to achieve our common goal of creating value for all Xerox shareholders,” the company said in a statement.
Though Icahn and Deason said they are not predisposed to any one transaction between Xerox and Fujifilm, they noted that changing Xerox’s control “would make sense since we, like many others, believe consolidation in this industry is inevitable.”
“Every day that the ‘old guard’ remains in power – feebly overseeing the company’s steady decline – is a waste of time that could inevitably erode the value of our investment down to nothing,” the billionaires warned. “We simply cannot wait any longer for things to change. We must act before it is too late.”
Icahn and Deason’s statement also includes a reference to Xerox Fuji’s 2017 accounting scandal in which revenues at the joint venture’s subsidiaries based in Australia and New Zealand “were overstated by $450 million over five years.”
Icahn and Deason said the joint venture should be renegotiated at the very least with terms more favorable to Xerox in the wake of the scandal.
They also want four new people elected to Xerox’s board of directors.