Fujifilm has filed a lawsuit against Xerox for cancelling its proposed merger. The lawsuit sought punitive damages and a US$183 million in termination fees for Xerox’s “intentional and egregious conduct”.
In a statement, Fujifilm placed blame on Xerox investors Carl Icahn and Darwin Deason, saying: “It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15 percent of Xerox’s shares, to dictate the fate of Xerox.”
In response to the $1 billion lawsuit, Xerox Vice Chairman and CEO John Visentin responded today with a public letter addressed to Fujifilm Chairman Shigetaka Komori.
In the letter, Visentin said the lawsuit filed as “desperate” and “misguided”. He pointed to the mismanagement of accounting practices at Fuji Xerox as the main reason for the merger fall-through.
“The mismanagement and resulting accounting fraud have weighed heavily on our dealings and have cost us both a significant amount of time and money,” said Visentin in the letter. “Along the way, there were multiple material breaches by Fujifilm and/or Fuji Xerox of important provisions contained in the Share Subscription Agreement and the various Fuji Xerox joint venture agreements that have made clear your lack of good faith.”
Xerox also expressed plans to terminate its contract with Fuji Xerox Asia Pacific. When the Technology Agreement expires in 2021, Visentin said that Xerox does not plan to renew it.
Fujifilm owns about 75% of Fuji Xerox. The joint venture handled contracts that supply global clients with Xerox services in the United States and Europe, and Fuji Xerox services in Asia.
After the current agreement expires, Xerox plans to sell its products directly to the Asia-Pacific market, with “sole and exclusive use of the valuable Xerox name and a more efficient, better managed supply chain than exists with Fuji Xerox.”