By Austen Hufford
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 14, 2018).
Xerox Corp. defended its deal with Fujifilm Holdings Corp. in a letter to shareholders Tuesday, a day after activist investor Carl Icahn said he would vote against the merger.
The U.S. printer-and-copier company last month struck a deal to combine itself with a joint venture it has run with Fujifilm for more than 50 years and give the Japanese company majority control of the new entity.
Mr. Icahn and fellow billionaire Darwin Deason on Monday, in their first public comment on the deal, said they plan to vote against it. Together they control 15.2% of the stock, a significant obstacle for a merger that requires Xerox shareholder approval.
On Tuesday Xerox took aim at the investors' "mischaracterizations" of the deal, adding that the agreement followed a yearlong review of alternatives for its struggling business.
"That review found that the transaction, as currently proposed, delivers significantly more value to Xerox shareholders than would be achievable on a stand-alone basis," the company wrote in its letter
Xero said shareholders -- through their stake in the new combination with an equity valuation of $9.4 billion -- are receiving a more-than-15% premium to Xerox's share price before The Wall Street Journal reported on the potential deal.
The company said current Xerox shareholders' rights will be protected in the newly formed Fuji Xerox, having the chance to designate five directors on a 12-member board.
Messrs. Icahn and Deason have criticized Xerox management and the proposed payment to Xerox holders -- which includes a $2.5 billion dividend payment equal to one-third of Xerox's market value before the Journal first reported on deal talks last month.
When the deal was announced on Jan. 31, Xerox and Fujifilm said it was expected to close in the second half of this year. A vote date has not been set.
On Tuesday, Mr. Deason took an additional step and sued Xerox in New York state court, seeking a judge's ruling to block the deal and terminate the joint venture. The lawsuit also reiterated many concerns that Mr. Deason had expressed about the deal.
Xerox said it would defend itself and that Mr. Deason was relying on "meritless legal claims."
Write to Austen Hufford at [email protected]