Wall Street is giving an initial thumbs down to a management shakeup at Xerox.
Shares of the print and imaging giant fell nearly 6 percent in early trading a day after it announced that CEO Jeff Jacobson and six board members are relinquishing their positions in an agreement with activist shareholder Carl Icahn. The billionaire investor has sought to derail the company's deal $6.1 billion takeover by Japan's Fujifilm.
Icahn said in a statement: "With new leadership in place, we believe Xerox will be much better positioned to take advantage of multiple potential value-enhancing opportunities, including restructuring its relationship with Fujifilm, our supposed 'partner' whose conduct over the last year is more unbelievable than what you see on fictional TV shows like 'House of Cards' or 'Billions.'"
Jacobson and Xerox Chairman Robert Keegan both agreed to step down as part of a settlement with Icahn and Darwin Deason, two of Xerox's biggest investors. Executives aligned with Icahn are replacing departing board members, with Keith Cozza, CEO of Icahn Enterprises, to be named chairman, and John Visentin, a consultant to Icahn in his fight with Xerox, to become CEO, Xerox said late Tuesday in a statement.
Fujifim's stock price fell almost 5 percent.
The management change throws a wrench into the January merger agreement with Fujifilm. Icahn and Darwin have campaigned against the deal, objecting to its terms and contending that Jacobson had struck a deal without board approval in an effort to save his job.
The new board will convene immediately to review options, "including terminating or restructuring Xerox's relationship with Fujifilm and the proposed transaction," the company stated. Xerox has reached out to Fujifilm about improved terms, but the Japanese company hasn't sweetened its bid.
Fujifilm said it has "serious concerns" about Xero's announcement and planned to appeal a court ruling last week that temporarily blocked the takeover, according to published reports. "We believe the record shows our good faith and arms-length negotiations for the benefit of all shareholders," Fujifilm said.
Deason has filed suit to block the transaction, and a New York judge sided with the activist, calling Jacobson "hopelessly conflicted during his negotiations of a strategic acquisition transaction that would result in a combined entity of which he would be CEO."