Xerox’s Leaders Depart, Putting Fujifilm Deal in Jeopardy

Xerox’s plan to merge its business with Fujifilm of Japan looks to be increasingly in jeopardy, as its chairman, its chief executive and a majority of its board members said they would resign in favor of a slate of new leaders favored by shareholders opposing the deal.

In a news release late Tuesday, Xerox said that Jeff Jacobson would resign as chief executive and a director, and that Robert Keegan, its chairman, would step down from the board. They will be replaced by allies of Carl Icahn, the billionaire hedge fund manager, and Darwin Deason, a major Xerox shareholder. Both have strenuously opposed the deal with Fujifilm.

Xerox said the new leaders and a reconstituted board of directors would immediately look to end or restructure the Fujifilm deal.

The turmoil at the top of what had once been an icon of U.S. industrial innovation came as the company planned to cede its business to its longtime Japanese partner. Under a deal announced in January, Fujifilm would own just over half of Xerox’s business. The companies said they would cut $1.7 billion in costs over the next several years and trim thousands of jobs at their joint venture.

But the deal ran into heavy opposition from Icahn and Deason, who say it undervalues Xerox’s assets. They have also accused Jacobson of rushing to strike a deal with Fujifilm to keep his job.

Xerox initially defended the deal. But last week a New York state court temporarily blocked it, saying Jacobson had sought to seal a pact with Fujifilm even though Xerox had told him to stop and said it was seeking to replace him.

Xerox said on Tuesday that it had reached an agreement with Icahn and Deason to resolve a proxy challenge they had mounted to unseat Xerox’s leadership, as well as litigation against the company and its directors.

The company had approached Fujifilm about amending the deal, it said, but the Japanese company had not yet responded with any potential change in terms. Fujifilm officials could not immediately be reached for comment.

Xerox’s board “determined that an immediate resolution of the pending litigation and proxy contest is in the best interest of our company and all stakeholders,” the company said in its statement. “This agreement will help ensure that Xerox and its employees will be able to continue to focus on serving customers and building on the company’s financial and operational performance.”

Under the deal announced Tuesday, Keith Cozza, chief executive of Icahn’s main investment vehicle, is expected to become chairman. John Visentin, an adviser to Icahn in his dispute with Xerox, will become chief executive. Both will join the board, replacing the departing directors, and the company will appoint four additional directors.