Xerox Corp.’s third-biggest shareholder sued to block its plan to turn over control to Fujifilm Holding Corp., calling the deal a one-sided transaction that leaves Xerox investors virtually powerless.
Darwin Deason asked a judge to block the deal and terminate joint venture agreements between the companies. He claims the agreement is the result of fraud and that directors breached their fiduciary duties.
“The transaction must be stopped dead in its tracks,” Deason said in the complaint, filed Tuesday in Manhattan state court.
Fuji, Xerox, current Xerox board members and Ursula M. Burns, Xerox’s former chairman and chief executive officer are named as defendants in the lawsuit, in which Deason seeks to represent all Xerox shareholders.
Deason and Carl Icahn, Xerox’s second-biggest investor, said in a Feb. 12 letter to shareholders that they opposed the deal, agreed to last month, because it “dramatically undervalues” the company.
Under terms of the agreement, Xerox would first merge with a joint venture the company operates with Fujifilm in Asia. Fujifilm would ultimately end up owning 50.1 percent of the combined entity, which expands the joint venture to encompass all of Xerox’s operations, the companies said. Xerox holders would receive a cash dividend of $9.80 a share under the proposed transaction.