Carl Icahn and Darwin Deason are a couple of seasoned billionaire investors, who know a bad deal when they see it, and they definitely don’t like the $6.1 billion deal announced last month to combine Fuji with Xerox. In a blog post published today, they are urging fellow shareholders to reject the offer.
You may recall that it was Icahn and Deason, who together own a 15 percent stake in the printing a copier giant, demanded that Xerox be put up for sale last month. Oh and while they were at it, they also demanded that CEO Jeff Jacobsen be fired immediately. These guys most definitely do not mess around.
But in a case of being careful what you wish for (or demand), Xerox did what it was told, but Icahn and Deason don’t like the terms They believe they unfairly favor Fuji and allows them take Xerox and incorporate it into their company without any assurances that investors like them will get what they see as a fair return.
In a joint statement published on Ichan’s website, the two billionaires did not pull any punches on what they thought of the deal (nothing much, nothing much) when they stated, “The transaction has a tortured, convoluted structure, but it was best summarized by Shigetaka Komori, Fuji’s Chairman and CEO, when he boasted to the Nikkei Asian Review that the “scheme will allow us to take control of Xerox without spending a penny,” they wrote in their blog post.
Neither are they thrilled with the way that Fuji has been run in the past, but beyond governance, it really appears to be an issue of pure economics for the pair. “Beyond the issues of control and governance of our investment going forward, the fundamental economics of this transaction also disproportionately favor Fuji at our expense,” they wrote.
They don’t stop there criticizing the standing partnership deal Xerox and Fuji have had in place for years, writing, “Sadly, as we all know, this is not the first time Xerox has negotiated a dreadful deal with Fuji.” They go onto claim that the terms of that deal have been withheld from shareholders for years. They are clearly not happy campers and they aren’t hiding it.
They close unsurprisingly by asking fellow shareholders to reject the deal. “To put it simply, the current Board of Directors has overseen the systematic destruction of Xerox, and, unless we do something, this latest Fuji scheme will be the company’s final death knell. We urge you – our fellow shareholders – do not let Fuji steal this company from us. There is still tremendous opportunity for us to realize value on our own if we bring in the right leadership,” they wrote.
In a statement, Xerox vehemently disagreed with Icahn and Deason. They say they did a review of the possibilities out there and this was the best deal they found. “A comprehensive review of strategic and financial alternatives conducted over many months by the independent members of the Xerox Board of Directors, in consultation with independent financial and legal advisors, considered several other options in detail and concluded that the combination with Fuji Xerox is the best path to create value for Xerox shareholders,” a spokesperson wrote to TechCrunch.
Regardless, it’s not often you get such an unfiltered view of how billionaire investors view a deal of this ilk, but in spite of pressing for a sale of Xerox, this is obviously not the deal these men want, and they have made it clear they will fight it tooth and nail.