Posted by Steve Wolosky, Andrew Freedman, and Ron Berenblat, Olshan Frome Wolosky LLP, on
Tuesday, May 29, 2018
Steve Wolosky, Andrew Freedman, and Ron Berenblat are partners at Olshan Frome Wolosky LLP. This post is based on an Olshan publication by Mr. Wolosky, Mr. Freedman, and Mr. Berenblat.
Related research from the Program on Corporate Governance includes Dancing with Activists by Lucian Bebchuk, Alon Brav, Wei Jiang, and Thomas Keusch (discussed on the Forum here).
On April 27, 2018, the New York State Supreme Court issued an important decision temporarily blocking a proposed business combination between Xerox Corporation (“Xerox”) and Fuji Xerox Co., Ltd. (“Fuji Xerox”), the longstanding joint venture between Xerox and Fujifilm Holdings Corporation (“Fuji”). The “lynchpin” of the Court’s decision to block the transaction turned on the conduct of Xerox’s “massively conflicted” CEO Jeff Jacobson in negotiating the transaction, and the Board’s “acquiescence” to such conduct. The Court was convinced that once Jacobson learned that Carl Icahn, the largest shareholder, and the board of directors of Xerox (the “Board”) were seeking to replace him as CEO, he “abandoned the Board’s request to obtain a value-maximizing all-cash transaction and engineered the framework for a one-sided deal” with Fuji that would result in him retaining the CEO position with the combined company.
In addition to blocking the transaction, the Court enjoined Xerox from enforcing its nomination deadline for its 2018 annual meeting of shareholders (the “2018 Annual Meeting”), representing a monumental victory for shareholder activists. This post focuses on the Court’s decision to enjoin enforcement of the nomination deadline given the major impact we believe it will have on strategies that could be deployed by shareholder activists after a nomination deadline has passed.
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