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Deason launches second lawsuit over Xerox deal

Friday, 09 March 2018
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Major shareholder Darwin Deason has filed a new lawsuit against Xerox after the company refused to allow him to make board nominations in his fight against the proposed $6.1 billion merger that would combine Xerox with existing joint venture Fuji Xerox.

The high-profile hedge fund manager nominated a full slate of ten directors to replace Xerox Corp’s existing board at the company’s upcoming AGM. But the company said he missed the deadline.

In his new lawsuit, Deason argues he has a right to nominate directors despite missing the deadline because the current board had made a series of significant decisions and disclosures to stockholders after the deadline.

Last month, Deason filed legal action with the US Securities and Exchange Commission to block the merger, claiming the deal undervalues the company.

Xerox this week issued a 2,000-word letter to shareholders defending the deal and “reinforcing its belief in the significant benefits of the Company’s proposed combination with Fuji Xerox.”

Dear Xerox Shareholders,

As a result of a comprehensive review of the Company’s strategic and financial alternatives, Xerox’s Board and management strongly believe that the combination with Fuji Xerox is the best path forward to create value for Xerox and its shareholders.

The revenue and cost synergies identified through this combination include:
Developing a more complete and competitive product portfolio, with enhanced offerings in areas where Xerox is currently underpenetrated such as high-speed inkjet and low-end A3;
Streamlining global R&D, product rollout and marketing strategies to deliver best-in-class solutions with greater coordination, efficiency and improved time-to-market;
Leveraging Xerox and Fuji Xerox’s integrated delivery and servicing capabilities to improve our solutions architecture and expand client relationships globally;
Transforming small and midsized business (SMB) strategy by expanding our channel reach and increasing cost competitiveness through cost synergies;
and optimizing the global footprint of manufacturing, distribution and R&D centers, and eliminating duplicative costs at corporate and support functions.

Xerox also said that in addition to $1.25 billion of cost synergies, a separate cost reduction program already underway at Fuji Xerox is expected to deliver $450 million in annual cost savings over the next two years (see chart).

This brings the total annual cost savings target for the combined company to over $1.7 billion to be completed by 2022, with approximately $1.2 billion achievable by 2020.


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