On Monday, the shares of Xerox Corp declined by 4 percent after the photocopier pioneer said that the company scrapped a planned deal amounting to $6.1 billion to merge with Fujifilm Holdings Corp.
The said decision hands victory in one of the largest ongoing proxy fights in the United States, to Carl Icahn and Darwin Deason, the activist investors who say that they can secure better offers for the firm than the deal with Fujifilm.
Some analysts who are based in Tokyo warned that a long renegotiation of terms and price as well as attempts to restructure the existing joint venture of the pair could negatively affect both companies.
The senior analyst at SMBC Nikko Securities, Ryosuke Katsura, stated: “There is a large gap between our assessment and Xerox’s largest investors’ assessment of Xerox’s value.
“We think that it would be negative for both firms if a break-off in negotiations is followed by a protracted period of uncertainty.”
The share of Xerox fell by 7.4 percent to $27.82, while the shares of Fujifilm rose by 1.5 percent.
An analyst at CFRA research, David Holt, said that the decline of the share price shows that the scrapping of the said deal will result in the loss of a special dividend amounting to $9.80.
Holt also said that there are potential interests from some other competitors including HP Inc.
Holt added: “When you put these two companies together, the value proposition looks attractive.”
Last January, Fuji, and Xerox agreed to a complex deal that would have had Xerox merge into Fuji Xerox, their Asia joint venture, and given control to Fujifilm. That prompted Deason and Icahn, who control 15 percent of the firm, to demand some changes to the board.
The said settlement with the billionaire investors that was outlined by Xerox on Sunday places the Japanese firm further on the back foot in any new negotiations with Xerox, even though some analysts have said that Fujifilm is under no pressure to rush.
Xerox said that it had repeatedly attempted to convince Fujifilm to launch discussions on the improved terms for a buyout to no avail. On Sunday, Fujifilm said that it disputed the right of Xerox to terminate the deal and would look at all its options including legal action seeking damages.
Deason and Icahn have said that they believe that other investors are “waiting in the wings” for Xerox, while people who are familiar with the matter have previously said that Apollo GlobalManagement LLC, a buyout firm, has expressed its interest in a bid for Xerox.