By Bloomberg
May 4, 2018

Xerox said its board and management team will stay after a legal settlement with activist shareholders to remove them lapsed, adding uncertainly to a $6.1 billion deal that would see the U.S. company cede control of its operations to Japan’s Fujifilm Holdings (fujiy).

Xerox (xrx) had just days ago said it struck a deal with Carl Icahn and Darwin Deason, who opposed the Fujifilm takeover in a suit, that would have brought in executives close to Icahn and replace current Chief Executive Officer Jeffrey Jacobson and other board members. The pact would have become effective “upon execution of stipulations discontinuing the Deason litigation with respect to the Xerox defendants,” according to a statement. In the absence of such stipulations, the agreement expired May 3, it said.

The news caps a tumultuous week for the American maker of office products. The deal it announced Tuesday was seen as a major victory for the activist shareholders, who accused Jacobson of striking the Fujifilm agreement without the board’s authorization to preserve his own job. The company had said the new board would look at alternatives, including terminating or restructuring the pact with Fujifilm.

“Now it’s just more uncertainty.,” said Bloomberg Intelligence analyst Simon Chan in Hong Kong. “We don’t know if the deal is back on. There’s something happening behind the scenes, which does not raise confidence in the deal or the company.”

Fight Continues

Icahn and Deason confirmed the settlement pact with Xerox has expired and promised to continue the fight.

“The Xerox board recklessly refused to follow through with the leadership and governance changes we agreed to, demanding unprecedented additional approvals for their own personal self-interest,” they wrote in an open letter to shareholders. “We will continue our fight to rescue and revitalize Xerox.”

Xerox representatives could not be immediately reached outside of office hours.

Fujifilm reiterated its call for the Xerox board to fulfill the deal agreement. The Japanese company is satisfied the U.S. court has “accepted our view of the importance of an open, orderly and transparent review process before any final decisions are made,” Fujifilm spokeswoman Mizuki Itou said in an emailed statement on Friday.

A New York judge last week temporarily halted the takeover plan, after Deason filed a suit to stop the pact and terminate existing joint venture agreements between the companies. Fujifilm has said it plans to appeal the court ruling that temporarily blocked the takeover.

Under the terms of the takeover announced in January, Xerox, which has a market value of $7.2 billion, would first merge with a joint venture that the company operates with Fujifilm in Asia. Tokyo-based Fujifilm would ultimately end up owning 50.1% of the combined entity, which would expand the joint venture to encompass all of Xerox’s operations. Xerox holders would receive a cash dividend of $9.80 a share under the proposed transaction.

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