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Fuji sues Xerox for more than $1 billion after merger was canceled

Jun 18, 2018

Credit www.fujifilmholdings.com

Fuji is suing Xerox  after that company backed out of a proposed merger.

Fuji had reached a deal in January with Xerox to take majority control of that company. But Xerox scrapped the deal last month in a settlement with activist investors Carl Icahn and Darwin Deason.

In May, Xerox also announced a new CEO and several new board members as part of that settlement.

Icahn and Deason have opposed the Fuji takeover, saying that it undervalues Xerox. But they have indicated they would consider a better offer.

The Wall St. Journal and Reuters reported on Monday that Fuji has now filed a suit in federal court, claiming that Xerox unlawfully terminated the merger deal due to pressure from Icahn and Deason.

Fuji says that by settling with the activist shareholders, Xerox prevented other stockholders from having a say on the deal.

Fuji is looking for an amount of money that reflects the lost benefits to Fuji shareholders, which it estimates to be in excess of a billion dollars as well as punitive damages from Xerox.

The Japanese company is also seeking a declaration that Xerox owes it a $183 million fee for terminating the merger.

Xerox released this statement in response to the suit:

"We remain extremely confident that the former Board correctly exercised its clear contractual right to validly terminate the transaction agreements due to, among other things, the continuously expanding unresolved accounting issues at Fuji Xerox. (Fuji Xerox is the longstanding venture between the two companies.)

Xerox will vigorously defend its decision and pursue any and all remedies available to Xerox arising from Fujifilm’s mismanagement and misconduct.  The Xerox Board of Directors is committed to driving the best path forward to maximize value for shareholders."