A New York court has temporarily blocked the merger between Fujifilm and Xerox due to allegations from a shareholder that Xerox’s CEO engineered the deal to protect his job.
NY Judge Ostrager said that Xerox CEO Jeffrey Jacobson’s ability to keep his job after the merger warranted a temporary hold on the merger to investigate claims by shareholder Darwin Deason that Jacobson is guilty of a breach of fiduciary duty.
Judge Ostrager’s ruling will prevent the merger from going through until a court rules on Deason’s lawsuit. Ostrager wrote in his decision:
“The facts “clearly show that Jacobson, having been told on Nov. 10 that the board was actively seeking a new CEO to replace him, was hopelessly conflicted during his negotiations of a strategic acquisition transaction that would result in a combined entity of which he would be CEO,” Ostrager said. “There is ample evidence that he collaborated with Fuji to make himself indispensable to the transaction.””
Xerox has said it will appeal the decision. Fujifilm released its own statement after the ruling, which says:
“Xerox’s board believes that a combination with Fuji Xerox is the best path forward to create value for the company and all of its shareholders,” according to a statement issued on Saturday in which the company said it will “immediately appeal the court’s decision.””
“”Fujiflim is considering its options, including whether to appeal the decision, a spokeswoman for the company said.”
“Xerox shareholders should be able to decide for themselves the operational, financial and strategic merits of the transaction,” she said. “Fujifilm negotiated with Xerox at arm’s length to create a transaction combining Xerox and Fuji Xerox that is the only option to provide shareholders of both companies with exceptional short- and long-term value.”