Two major companies with California operations are engaged in a legal dispute following the failure of their planned corporate merger. Fujifilm filed suit on June 18 seeking more than $1 billion plus punitive damages from Xerox. Fujifilm alleges that Xerox abandoned the companies’ planned $6.1 billion merger due to pressure from activist investors Darwin Deason and Carl Icahn.
Specifically, court documents indicate that Fujifilm has accused Xerox of egregious and intentional conduct in walking away from the deal after Xerox settled a case with Deason and Icahn. As part of the settlement, control of Xerox passed to new management. Fujifilm is also seeking a ruling that Xerox is liable to pay a $183 million fee for failing to follow through with the transaction.
In January 2018, the companies agreed to a merger than would have given Fujifilm a slight majority of Xerox common stock and would have brought Xerox into the companies’ joint venture in Asia, Fuji Xerox. Deason and Icahn argued that the proposed merger undervalued Xerox and accused management of making a bad deal for reasons not related to company performance. Xerox’s former head resigned as part of the settlement with Deason and Icahn.
Business owners and entrepreneurs in California may do well to seek the services of a professional in considering and planning mergers or other major transactions. A business litigation attorney may be able to help in such cases by examining the proposed structure and providing advice regarding potential sticking points or pitfalls in the deal. In a case where a business is harmed due to a breach of contract by an individual or another business, an attorney may be able to help by examining relevant contracts to determine whether breach has occurred or by attempting to negotiate a settlement to recover damages.