Xerox scraps planned $6.1 billion deal with Fujifilm

Xerox said its new board would meet immediately and “begin a process to evaluate all strategic alternatives to maximize shareholder value.” (Courtesy Xerox)
Updated 14 May 2018
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Xerox scraps planned $6.1 billion deal with Fujifilm

NEW YORK/TOKYO: Xerox has scrapped a planned $6.1 billion deal with Fujifilm Holdings Corp. in a settlement with activist investors Carl Icahn and Darwin Deason that also hands control of the US photocopier giant to new management.
The victory for the billionaire investors puts the Japanese company further on the backfoot in any new negotiations with Xerox, although it is by no means out of contention as Xerox is now expected to go up for sale in an auction at a higher price.
Fujifilm was quick to take a combative stance, saying in a statement it disputes Xerox’s unilateral decision to terminate the transaction and would look at all options including legal action seeking damages.
The two companies agreed in January to a complex deal that would merge Xerox into their Asia joint venture Fuji Xerox. The deal prompted Icahn and Deason, who own 15 percent of Xerox, to launch a proxy fight.
The activist investors have also said they are unhappy with the current structure of the joint venture, and settlement creates uncertainty concerning potential changes to a business that accounts for nearly half of Fujifilm’s revenue.
The settlement will see Chief Executive Officer Jeff Jacobson — the main architect of the deal with Fujifilm — as well as five other directors step down. John Visentin is expected to take the helm.
It is Xerox’s second settlement with the activist investors in just two weeks. The first settlement agreement was allowed to expire as Xerox came to believe it had flexibility to renegotiate a deal with Fujifilm and also took into account a stock dive that followed the agreement.
“We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm,” Icahn said in a statement.
Xerox said its new board would meet immediately and “begin a process to evaluate all strategic alternatives to maximize shareholder value.”
Buyout firm Apollo Global Management have considered a bid for Xerox, sources have said.
Visentin had previously been hired by Icahn to assist in fighting Xerox. He had also been a candidate under consideration by the old board to replace Jacobson as recently as last year, according to court documents.
Xerox, which earlier sought better terms from Fujifilm, said it was ending the deal with the Japanese company partly because Fujifilm had failed to provide audited financial information for Fuji Xerox by an April 15 deadline.
Xerox also said there were “material deviations” between audited Fuji Xerox financial statements and unaudited statements provided previously.
As part of the settlement, Xerox and Icahn agreed to withdraw their board candidates from an upcoming shareholder meeting, and said the meeting would be postponed.


OECD warns of global economic slowdown

Updated 35 min 23 sec ago
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OECD warns of global economic slowdown

  • ‘We urge policy-makers to help restore confidence in the international rules-based trading system’
  • Trade tensions have already shaved 0.1-0.2 percentage points off global GDP this year

PARIS: The global economy has peaked and faces a slowdown driven by international trade tensions and tighter monetary conditions, the Organization for Economic Cooperation and Development warned Wednesday.
The OECD, which groups the top developed economies, said it had trimmed its growth forecast for 2019 to 3.5 percent from the previous 3.7 percent.
The 2018 estimate was left unchanged at 3.7 percent.
For 2020, the global economy should grow 3.5 percent, it said in its latest Economic Outlook report.
“The shakier outlook in 2019 reflects deteriorating prospects, principally in emerging markets such as Turkey, Argentina and Brazil,” it said.
“The further slowdown in 2020 is more a reflection of developments in advanced economies as slower trade and lower fiscal and monetary support take their toll.”
OECD chief Angel Gurria highlighted problems caused by trade conflicts and political uncertainty — an apparent reference to US President Donald Trump’s stand-off with China which has roiled the markets.
“We urge policy-makers to help restore confidence in the international rules-based trading system,” Gurria said in a statement.
Trade tensions have already shaved 0.1-0.2 percentage points off global GDP this year, the Economic Outlook report said.
If Washington were to hike tariffs to 25 percent on all Chinese imports — as Trump has threatened to do — world economic growth could fall to close to three percent in 2020.
Growth rates would drop by an estimated 0.8 percent in the US and by 0.6 percent in China, it added.
For the moment, the OECD puts US economic growth at 2.9 percent this year and 2.7 percent in 2019, unchanged from previous estimates, but trimmed China by 0.1 percentage point each to 6.6 percent and 6.3 percent.
It warned that “a much sharper slowdown in Chinese growth would damage global growth significantly, particularly if it were to hit financial market confidence.”
Laurence Boone, OECD Chief Economist, said “There are few indications at present that the slowdown will be more severe than projected. But the risks are high enough to raise the alarm and prepare for any storms ahead.”