Icahn't get right Xerox Fuji merger spoils, cries activist investor Carl

Me? Single biggest shareholder? Kneel before my portfolio

Activist investor Carl Icahn is ranting that Fujifilm's zero-sum acquisition of photocopier biz Xerox leaves him as a "passive minority owner of a Fuji subsidiary".

The takeover deal, valued at $6.1bn, came about through a complicated series of purchases of a Fuji-Xerox joint venture resulting in the JV buying out Fuji's stake in itself, with Fuji using the proceeds of that to then swallow Xerox.

As a shareholder in Xerox, Icahn is not happy with this. In late January he joined forces with fellow activist Darwin Deacon (together they own 15 per cent of Xerox) to demand Xerox's board be burned to the ground, the JV with Fuji be terminated or renegotiated, and a new exec team be hired to seek strategic alternatives for the firm.

Clearly those requests were ignored and the proposed buy of Xerox is proceeding, so Icahn has taken to his blog once again to complain that he isn't getting a fair cut of the spoils.

"We – the existing Xerox shareholders – will receive (1) an additional, indirect 25 per cent interest in a Fuji subsidiary that just last year disclosed a $360m accounting scandal caused by a 'culture of concealment' and Fuji’s failure to have adequate management systems and (2) a one-time special dividend financed with our own assets," stormed Icahn.

He added: "In other words, we are selling control of Xerox for a cash flow multiple barely exceeding 2.3x. In addition, we are also surrendering half of all potential future dividend growth."

Deacon is also a co-signatory of the blog post.

Xerox's other shareholders, demanded the distraught duo, must immediately ask for copies of advice given to the directors about the merger, details of other parties invited to buy the biz, and various other documents that old Icahn hopes will give him some leverage to extract some shekels from the deal. Naturally, everyone should also vote to sack the current board, they advised.

In place of the Fuji buyout, Icahn and Deacon have proposed to "reinvigorate the [Xerox] portfolio towards software, security and services while maintaining the existing dominant market share position by leveraging the company’s strong position in the higher-end enterprise market," targeting SMEs to grow sales revenues – and a new round of cost-cutting just in case none of those things work.

Fujifilm has already announced that it is sacking 10,000 workers at Fuji-Xerox, "more than a fifth of its workforce at the joint venture," according to Reuters.

Xerox previously said its board was happy with the direction the company was taking, but El Reg suspects we haven't heard the last of this one. ®

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