Xerox says Icahn, Deason letter 'misleading and inaccurate'
Xerox announced that its board has reviewed the February 12 letter signed by Carl Icahn and Darwin Deason, stating: "To date, the Board has chosen not to engage in a public debate with our two large shareholders. However, we believe their misleading and inaccurate Letter warrants a written response to ensure the facts are clear for all Xerox shareholders." In its response, Xerox added in part: "Mr. Icahn and Mr. Deason suggest through suspect math that investors are "selling control of Xerox for a cash flow multiple barely exceeding 2.3x." This analysis is just plain wrong. As discussed in prior presentations to investors, Xerox shareholders receive in the Transaction (i) a $2.5 billion dividend at closing; (ii) 49.9% of the combined Xerox and Fuji Xerox; and (iii) 49.9% of the benefit of the value created from at least $1.7 billion of annual cost savings, including $1.25 billion in cost synergies that are only achievable via this Transaction...Mr. Icahn's and Mr. Deason's suggestion of 'freeing the company from the shackles of the Fuji Xerox joint venture' is not a viable strategy...The agreement is a binding legal document that cannot be simply wished away, renegotiated or dissolved because Mr. Icahn and Mr. Deason desire it so...We believe the existence of the Fuji Xerox joint venture negatively impacts value in any other merger transaction. More likely, it would simply make such a transaction unattractive to any other strategic buyer. It is also not something that needs speculation: since the public speculation of a potential transaction with Fujifilm on January 10, 2018, no potential strategic buyer contacted Xerox, or its advisors, with any credible proposal or alternatives...As we made clear numerous times in our disclosures, of the $1.7 billion in total annual cost reductions by 2020, $1.25 billion is related to what we can achieve only by integrating the two companies, while the remaining $450 million comes from a Fuji Xerox-specific cost reduction program...Both Xerox and Fujifilm have a proven track record of executing significant transformations in the past, and are fully committed to realizing the full synergy upside from the combined company...Our full-year 2017 results clearly demonstrate that the strategy we have implemented is working as we met or exceeded every financial metric we guided to in 2017...In conclusion, Mr. Icahn and Mr. Deason fail to provide an actionable plan or any cogent ideas to make their scheme a reality. Following their playbook would be both highly irresponsible and unlikely to succeed, particularly given the terms and constraints of the existing Fuji Xerox joint venture agreement, and the realities of today's competitive environment."