Xerox Shareholder Class Action Settles, Achieving Termination of Conflicted Deal with Fuji and Leading to Auction Process for All Bidders, Announces Bernstein Litowitz, Grant & Eisenhofer, and Kessler Topaz
NEW YORK, May 14, 2018 /PRNewswire/ -- Just weeks after obtaining a landmark injunction blocking the proposed sale of a majority stake of Xerox Corp. ("Xerox") to Fujifilm Holdings ("Fuji"), shareholders of Xerox have obtained an unprecedented settlement agreement terminating the Fuji deal outright.
In addition to the termination of the deal, the settlement terms include the resignation of a majority of the Xerox Board's directors and its CEO, appointments of new, independent directors and executive leadership, a fair and open future nomination process for directors, and a commitment to begin evaluating all strategic alternatives to maximize shareholder value.
Represented by Co-Lead Counsel Bernstein Litowitz Berger & Grossmann, Grant & Eisenhofer, and Kessler, Topaz, Meltzer & Check, Xerox shareholders brought suit in January 2018 after the Company announced a change-of-control transaction with Fuji. As alleged by the suing shareholders, the underpriced deal allowed Fuji to take control of 50.1% of the Company at an unfair price. Among other conflicts, the shareholders alleged that Xerox CEO Jeff Jacobson understood his job was in jeopardy and gave Fuji a sweetheart deal in exchange for a promise that he could run the combined company, all at Xerox shareholders' expense.
Lead plaintiffs for the class are the Asbestos Workers Philadelphia Pension Fund, Carpenters Pension Fund of Illinois, and the Iron Workers District Council of Philadelphia & Vicinity Benefit & Pension Plan.
Conflicted deal may serve as a watershed moment in governance
On April 27, the shareholders achieved a precedent-setting injunction against the deal from New York State Supreme Court Justice Barry Ostrager, who prohibited Xerox and Fuji from consummating the transaction on a preliminary basis. In an extraordinary opinion, Justice Ostrager noted that Fuji was contributing no cash for acquiring control of Xerox and that the proposed deal failed to pay Xerox shareholders a premium for selling control of the company. The Justice wrote: "This transaction was largely negotiated by a massively conflicted CEO in breach of his fiduciary duties to further his self-interest and approved by a Board, more than half of whom were perpetuating themselves in office for five years without properly supervising Xerox's conflicted CEO."
Importantly, the settlement with the Xerox Board does not resolve pending claims against Fuji, which Justice Ostrager found to have likely aided and abetted the board's breaches during the original, conflicted deal. Even though the proposed deal will not move forward, Fuji will continue to face substantial litigation risk for its conduct, as the new Xerox Board attempts to find an alternative suitor for Xerox or renegotiate a better deal with Fuji. Notably, Fuji and Xerox currently operate a joint venture that manufactures and distributes Xerox products in the Asia-Pacific region. As revealed when Xerox and Fuji announced the transaction, the contracts governing the joint venture contained previously undisclosed change-of-control provisions that created complications for any sale of Xerox to other strategic acquirors. By refusing to dismiss their claims against Fuji, lead plaintiffs aim to secure a more level playing field for all bidders and to help ensure that Fuji will not take further actions to disadvantage Xerox's shareholders for its own benefit.
The litigation and subsequent termination surrounding the tainted deal should have long-lasting legal implications, strongly encouraging boards to insure negotiations with potential buyers are conducted by non-conflicted parties.
"It took months of aggressive litigation to provide Xerox shareholders with the fair and open sales process they were entitled to all along. This settlement clearly shows the value that can be created when determined investors and their counsel act decisively to challenge corporate misconduct," said Mark Lebovitch, a partner with Bernstein Litowitz.
"We are optimistic that conditions have now been created that will enable a new value-maximizing transaction for Xerox shareholders to be achieved,: added James Sabella, a director at Grant & Eisenhofer.
Kessler Topaz partner Justin Reliford said: "This litigation should serve as a warning to corporate fiduciaries who place their own interests ahead of the shareholders they serve. Undivided loyalty is a requirement of the job."
The case is captioned: In re Xerox Corp., Consolidated Shareholder Litigation; Index Number: 650766/18.
About Bernstein Litowitz
The top-ranked securities litigation firm in the U.S. (ISS Securities Class Action Services), BLB&G has obtained over $31 billion on behalf of investors. Working with its institutional investor clients, the firm has achieved precedent-setting corporate governance reforms which have increased market transparency, held wrongdoers accountable and improved corporate business practices in groundbreaking ways. BLB&G is routinely recognized by industry observers for its legal excellence and achievements, including: Four-time national "Plaintiff Firm of the Year" and "the plaintiff securities shop everyone else aspires to be like..." - Benchmark Litigation; One of the nation's "Most Feared Plaintiffs Firms" - Law360; "Consistently achieving the highest returns for investors" - The National Law Journal; "The best advice in the field....they stand above everyone else." - Chambers USA; "Battle proven..." - The Wall Street Journal. For more visit: www.blbglaw.com.
About Grant & Eisenhofer P.A.
Grant & Eisenhofer is one of the nation's leading litigation firms, with a highly successful track record representing plaintiffs in complex litigation and arbitration matters. The firm has offices in Wilmington, New York, and Chicago, and an international docket of high-profile cases. G&E's clients include institutional investors, whistleblowers and other stakeholders in securities class actions, derivative lawsuits, consumer class actions, antitrust suits, bankruptcy litigation and whistleblower cases involving the False Claims Act. The firm has recovered more than $28 billion in the last 10 years and has twice been cited by RiskMetrics for securing the highest average investor recovery in securities class actions. G&E has been named one of the country's top plaintiffs' law firms by The National Law Journal for more than a decade and was named one of the nation's "Most Feared Plaintiffs Firms" by Law360. For more information, visit www.gelaw.com.
About Kessler Topaz
Kessler Topaz is one of the world's leading advocates for institutional investors from around the world. The firm has recovered billions of dollars for clients resulting from securities class actions, shareholder derivative suits, antitrust litigation and other complex litigation in jurisdictions around the globe. For more, visit www.ktmc.com.
CONTACT: Alexander Coxe 212-554-1423 [email protected]
SOURCE Bernstein Litowitz Berger & Grossmann LLP
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