Xerox CEO Steps Down as Company Reviews Fujifilm Deal

Xerox CEO Steps Down as Company Reviews Fujifilm Deal

Xerox Corp.’s Chief Executive Jeff Jacobson is resigning in a settlement with two of the company’s biggest investors, Carl Icahn and Darwin Deason, a pact that shakes up the majority of the board and puts its transaction with Fujifilm Holdings Corp. at risk.

The new board is expected to consider alternatives to the deal with Fujifilm, a complex transaction that sells the majority of Xerox to the Japanese company by combining with a joint venture the two operate in Asia.

Messrs. Icahn and Deason have been seeking to kill that deal, saying it undervalues Xerox, and had alleged Mr. Jacobson quickly negotiated the deal in an attempt to save his own job. Xerox had launched a CEO search last year, the company has disclosed.

A judge last week temporarily blocked the Fujifilm transaction, siding with Mr. Deason in a lawsuit, saying the talks were conflicted by Mr. Jacobson’s tenuous position.

The settlement effectively ends a legal fight with Xerox and its investors as well as a potential proxy fight that would have sought to remove the entire board, by giving Messrs. Icahn and Deason six of what will now be nine seats. Keith Cozza, who is chief executive of Mr. Icahn’s public company, will be named chairman of Xerox.

Xerox will name as chief executive John Visentin. Xerox had considered Mr. Visentin as the leading candidate to replace Mr. Jacobson last year before it ended its search and reaffirmed faith in him, The Wall Street Journal has reported. Mr. Visentin is a former executive at several technology companies and had been working with the activist investors at Xerox.

The settlement doesn’t include pending litigation Mr. Deason has against Fujifilm. The judge also criticized Fujifilm’s actions in his opinion halting the deal.

Fujifilm, which wasn’t immediately able to comment, has defended the transaction and said it was negotiated fairly.

Xerox had previously defended Mr. Jacobson and said that he had won over the board by hitting earnings and financial targets, and that the whole board believed the Fujifilm deal was the best option. Now it is settling the litigation, saying it wanted to avoid litigation and risks to the deal. The judge has to sign off on the settlement.

Seven of the old board members will resign, including Chairman Robert Keegan, who approved Mr. Jacobson’s negotiations, and lead director Ann Reese, who also approved of his talks with Fujifilm.

Xerox and Fujifilm have been in discussions about renegotiating the deal, but Fujifilm will now face a new board led by a team that wants to not only end the sale but also cancel the 50-plus-year joint venture, Fuji Xerox, that is at the heart of their relationship.

Xerox had asked Fujifilm to sweeten the merger deal, but in its statement Tuesday night, Xerox said Fuji had yet to make an improved offer.

Write to David Benoit at david.benoit@wsj.com

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