LONDON, UK / ACCESSWIRE / January 4, 2017 / Active Wall St. blog coverage looks at the headline from Xerox Corp. (NYSE: XRX) as the Company announced on January 03, 2013, that it has separated from Conduent Inc. (NYSE: CNDT), creating two companies that will be trading as two separate independent publicly traded entities. The business process outsourcing arm Conduent was listed on the New York Stock Exchange on January 03, 2014. The technology and hardware business, Xerox starts a new chapter in its new avatar and will ring the opening bell on January 04, 2017. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The Split

Xerox's Board of Directors approved the split into two companies during a meeting held in November 2016.

According to the terms of separation, Xerox's shareholders will receive one share of Conduent against every five shares of Xerox. The record date for the distribution will be December 15, 2016 and the distribution date is set for December 31, 2016. Any fractional share will not be paid to the shareholders of Xerox, but the resultant stock will be sold in the open market. The net proceeds from the sale of the resultant fractional shares will be paid to Xerox.

Conduent will pay Xerox an amount of $1.8 billion as a cash transfer as a part of the split. Xerox plans to use the funds received from Conduent along with cash in hand to pay off its debts of $2.0 billion.

Conduent

Xerox had announced in June 2016 that the new BPO company will be named Conduent Inc. Conduent was structured to be a Fortune 500 scale business process services company with expertise in transaction-intensive processing, analytics, and automation. It would offer backend support to businesses, government bodies by handling large-scale transactions related to customer care, transportation solutions, and healthcare payer and provider services. For the year 2015, Conduent had revenue of $7 billion and 96,000 employees globally.

Xerox had identified and chosen Ashok Vemuri to lead as the CEO and Brian Webb-Walsh was chosen as the CFO for Conduent post the separation.

Xerox

In June 2016, when the split was finalized, it was decided that the document technology business would continue functioning under the Xerox name and brand. It will be structured as a Fortune 500 scale company and a global leader in the document digital print and content technology and applications and handle managed print services and workflow solutions. It will continue to offer its hardware, software, and related services to governments as well as small to large commercial businesses.

Jeff Jacobson was named the CEO and William F. Osbourn was named as the CFO post the separation. Former CEO, Ursula Burns, will take up the position of the Chairman of the Board.

Back story

Xerox had announced in January 2016 that it would split up the company into in two separate entities. The original business of copiers and printers would continue to be traded as Xerox and the BPO would be listed as a separate business entity. The decision to split into two separate companies was also influenced by activist investor Carl Icahn, who had declared in November 2015 that he owned 7.1% stake in the Company. He became the second largest stake holder followed by Vanguard Group Inc.

Carl Icahn had disclosed in the securities filing that he will discuss Xerox's performance and looking at strategic alternatives. After the disclosure, Carl Icahn had claimed stake for the positions in the Board of Directors of Xerox. In June 2016, Carl Icahn entered into an agreement with Xerox and appointed his representative Jonathan Christodoro to Xerox's Board. Jonathan Christodoro is the MD of Icahn Capital LP, a subsidiary of Icahn Enterprises L.P.

Xerox had been going through some tough financial times due to dwindling sales of the printers and copiers. Xerox's current CEO, Ursula Burns, had taken steps to restructure the organisation and diversified the business to tap new revenue sources. She had been instrumental in diversifying Xerox into the BPO business by taking up back-office operations for companies and governments. By the end of September 2015, the document management, bill processing, and other services contributed 56% to the Company's revenues. To strengthen this new revenue generating business, Ursula Burns had acquired Affiliated Computer Services (ACS) for $6.4 billion in 2010. ACS used to provide bill processing, managing call centers, and other back-office services to businesses and governments including Medicare and Medicaid agencies.

However, even diversifying into the BPO business could not fix declining market value of Xerox. Based on current estimates, the company has lost roughly $2.5 billion in total revenues for the period of 2011-2015.

Stock Performance

At the closing bell, on Tuesday, January 03, 2017, Xerox's stock tumbled 21.08%, ending the trading session at $6.89. A total volume of 64.40 million shares were traded at the end of the day, which was higher than the 3-month average volume of 9.38 million shares. The Company's shares are trading at a PE ratio of 11.37 and have a dividend yield of 4.50%. The stock currently has a market cap of $6.98 billion.

Conduent's stock started its debut in the US stock market with a decline of 7.92% and closed the trading session on Tuesday at $13.72.

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