Xerox-Fujifilm deal temporarily blocked by New York judge

Xerox Corp.’s plan to sell itself to Japanese rival Fujifilm Holding Corp. was temporarily blocked by a New York judge who determined the chief executive officer behind the deal was trying to preserve his own job.

Investor Darwin Deason sued to block the transaction, accusing CEO Jeffrey Jacobson of acting without authorisation to strike a deal with Fujifilm that preserved his job at the expense of shareholder value. Xerox labelled that claim “highly disingenuous” and asked the judge to deny Deason’s request for a court order blocking the deal. The company said in a statement that it would appeal the decision.

Judge Barry Ostrager said in his order Friday that Xerox’s existing joint venture with Fujifilm would have made it difficult but not impossible to pursue another deal that would have required a buyer to provide a cash payment to Xerox investors.

The facts “clearly show that Jacobson, having been told on Nov. 10 that the board was actively seeking a new CEO to replace him, was hopelessly conflicted during his negotiations of a strategic acquisition transaction that would result in a combined entity of which he would be CEO,” Ostrager said. “There is ample evidence that he collaborated with Fuji to make himself indispensable to the transaction.”

Under the terms of the deal, announced in January, Xerox, which has a market value of $7.7 billion, would first merge with a joint venture that the company operates with Fujifilm in Asia.