The ‘bad actor’ jibe from Xerox about the on-off merger plan has stung a savage reply from Fujifilm’s chairman Shigetaka Komori.

In the letter, Komori highlights the following:
 
·       It is obvious to objective observers that Xerox’s stated reasons for terminating the transaction with Fujifilm are merely a thinly veiled pretext to bargain for a higher price from Fujifilm at the behest of two minority shareholders of Xerox. 

·       It was Xerox that first approached Fujifilm with the proposed transaction. Fujifilm entered into discussions because it believed the transaction could be beneficial specifically for Xerox shareholders.

·       Xerox’s common stock closed at $34.13 per share after the announcement of the transaction on January 31, 2018; yesterday, it closed at $25.33 per share, a decline of more than 25 percent. The market appears to understand that the agreed-upon transaction was substantially superior to the status quo for Xerox shareholders.

·       Fujifilm continues to maintain that Xerox should take all steps to allow its shareholders to decide for themselves whether to approve the transaction with Fuji Xerox.

·       Fuji Xerox’s past accounting issues have been properly resolved and there is no reason to assert that these issues continue to exist. Audits have been completed by two top-tier auditing firms, for all of Fuji Xerox’s operating companies in its territory, including China.

·       If Xerox does not renew the Technology Agreement in 2021, Fujifilm is prepared to respond by competing with Xerox in Asia Pacific, and by marketing in territories where Xerox is currently doing business unchallenged by Fujifilm, such as America and Europe.

Not surprisingly, your every attempt to overturn that valid termination has failed and will continue to fail”

A showdown in a New York court will finally decide whether Xerox were above board by scrapping the take-over deal or if as Fujifilm allege they were in breach of contract. Ahead of that both sides are trading insults in the increasingly acrimonious battle to seek control of the multi-billion dollar company part owned by Fujifilm.

Jeff Jacobson was forced out by shareholder rebels as chief executive officer of Xerox after he agreed the take-over by Fujifilm, but the new man at the top John Visentin promptly scrapped the deal saying it was unvalued. He fired a letter at Fujifilm’s Shigetaka Komori saying his legal challenge was: "nothing more than a desperate, misguided negotiating ploy" to save the merger.

He continues: "Not surprisingly, your every attempt to overturn that valid termination has failed and will continue to fail. No matter what you tell the Japanese media, it is abundantly clear that the bad actor here is Fujifilm, not Xerox. The litigation you filed against Xerox last week is nothing more than a desperate, misguided negotiating ploy to save a takeover that—as a result of the surreptitious actions of your team—to this day remains enjoined by order of the New York State Supreme Court.”

And there was a final jibe: “In light of Fujifilm’s numerous contractual breaches and continued misconduct and bad faith in its dealings with Xerox (among other things), Xerox does not currently plan to renew the technology agreement when it expires in 2021.”

Xerox’s Visentin is backed by Icahn, Xerox's largest shareholder and architect of Jacobson’s downfall and the scrapping of the merger was defiant. He signed off a statement saying that Xerox states they have post Fujifilm deal plans: “We will detail for our shareholders the enormous opportunity for Xerox to sell products directly into the growing 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 today.”

And in a final swipe at the Japanese company they said that: “Fujifilm’s actions have forced us to move forward on several fronts to protect our supply chain”.

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