Fujifilm Holdings has sued Xerox for well over $1 billion, faulting the printer and copier company for succumbing to pressure from activist investors Carl Icahn and Darwin Deason in calling off a proposed merger.
In a complaint filed with the US District Court in Manhattan, Fujifilm accused Xerox of breach of contract and engaging in "intentional and egregious conduct" in abandoning the $6.1 billion merger announced in January.
Billionaire Icahn and Deason together owned 15% of Xerox shares, and said the merger undervalued the Connecticut-based company.
"It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15% of Xerox's shares, to dictate the fate of Xerox," Fujifilm said in a statement.
The merger was scrapped on May 13 when Xerox, in a settlement with Icahn and Deason, agreed to install several new directors and replace Jeff Jacobson as chief executive with technology executive John Visentin.
Xerox also cited unresolved accounting issues as a reason to end the merger.
In a statement, Xerox said it remained "extremely confident" it had a contractual right to back out, and would seek remedies for Fujifilm's "mismanagement and misconduct."
Xerox has been exploring strategic options, including transactions with other companies, but the lawsuit could force it to address Fujifilm's grievances sooner.
A merger would have combined Xerox with the 56-year-old joint venture Fujifilm Xerox, in which Fujifilm and Xerox had stakes of 75% and 25%, respectively.
After the proposed deal, Fujifilm would have owned 50.1% of Xerox's common stock, and Xerox shareholders would have received a $2.5 billion special dividend.
Fujifilm had hoped the merger would deliver at least $1.7 billion of cost savings and $1 billion of new revenue annually.
Its lawsuit also seeks punitive damages and a $183m merger termination fee.
"Xerox has recently been subject to the whims of activist investors Carl Icahn and Darwin Deason, who, notwithstanding their minority ownership of Xerox shares, have yanked the Xerox board in more directions than can be counted," Fujifilm said.
