FUJIY FUJIFILM Holdings Corporation (PK)

By Mayumi Negishi 

TOKYO-- Fujifilm Holdings Corp. said Monday it would continue to fight for a merger with Xerox Corp. and present its offer again to Xerox's new management, but said it wouldn't sweeten the terms.

Xerox on Sunday said it would back out of a deal reached in January, under which Fujifilm was to have taken a majority stake in the American company. Xerox said it reached a new settlement with two of its biggest shareholders who oppose the January deal. The settlement calls for Xerox to replace its chief executive and overhaul its board.

The shareholders, Carl Icahn and Darwin Deason, have said they would look favorably on a deal to sell Xerox if the buyer paid $40 a share in cash. Xerox shares closed last week at $30.17.

After the Xerox board's settlement with Messrs. Icahn and Deason, market players were watching to see whether Fujifilm would be willing to raise its offer. Fujifilm spokeswoman Mizuki Ito said the Japanese company isn't considering that.

"We are not in a hurry, nor do we want a deal on any terms," Ms. Ito said. "Fujifilm has its shareholders, and we will not accept a deal that is not rational or acceptable."

She said Fujifilm hoped to explain to Xerox's new executives why it believes its offer is fair.

Fujifilm also threatened to sue Xerox.

"We do not believe that Xerox has a legal right to terminate our agreement and we are reviewing all of our available options, including bringing a legal action seeking damages," Fujifilm said in a statement. All shareholders should have the chance to vote on the deal, it said.

Xerox said it opted to back out of the deal with Fujifilm because the Japanese company didn't deliver Fuji Xerox's audited financial statements by April 15, and there were material deviations in the audited financials when compared with the unaudited financials. Fujifilm declined to comment on that allegation.

Fujifilm shareholders greeted the Xerox board's decision favorably, with shares rising 1.6% in Tokyo trading Monday. Some analysts say Fujifilm should focus on its operations in faster-growing areas such as health care, biomaterials and semiconductor materials rather than deepening its involvement in the declining printer and copier business.

On the new Xerox board, the majority of directors are backed by Messrs. Icahn and Deason. The two have said Xerox could be sold to a competitor or a private-equity firm.

Under the January deal, Fujifilm would have traded its 75% stake in a longtime joint venture with Xerox in the Asia-Pacific region for a 50.1% stake in a new Xerox that would operate world-wide including in Asia. Xerox shareholders would also have been paid $2.5 billion in aggregate via a special dividend. Messrs. Icahn and Deason argued the plan undervalued Xerox.

Write to Mayumi Negishi at mayumi.negishi@wsj.com

(END) Dow Jones Newswires

May 14, 2018 06:31 ET (10:31 GMT)

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