Xerox Said to Split in Two; Icahn Gets Board Seats, WSJ Says

  • Company has been conducting review of structural options
  • Essentially unravels Xerox's largest acquisition of Affiliated

Xerox Corp. will announce Friday that it’s splitting itself into two companies, essentially unwinding its largest-ever acquisition, the Wall Street Journal reported, citing unnamed people familiar with the matter.

Famous as the brand behind the copy machine, the now-struggling Xerox will divide itself into a company grouping its hardware operations and another that will house its services business, according to the Journal. Xerox will announce the move when it reports earnings Friday, the newspaper said. Carl Icahn will be given three board seats on the services company’s board, according to the Journal.

Sean Collins, a spokesman for Norwalk, Connecticut-based Xerox, had no comment on the report. Icahn didn’t immediately respond to requests for comment.

In November Icahn took a stake that now stands at 8 percent in Xerox, in the belief that the shares were undervalued. He said at the time he intended to speak with executives and the board to improve operational performance and pursue strategic alternatives. Xerox said earlier that it was conducting a broad-based review of structural options for the company’s business portfolio and capital allocation.

Split Deal

With the separation Xerox will basically unravel its purchase of Affiliated Computer Services Inc., which it bought in 2010 for $6.2 billion. That deal helped Xerox expand into markets including managing and automating electronic payments for governments and processing claims for insurers, as part of its strategy to expand in services.

In October, Xerox reported third quarter services revenue of $2.4 billion, and document technology sales of $1.8 billion.

Xerox shares fell 1.7 percent in extended trading in New York to $9.07. They have declined 13 percent this year compared with a 7.4 percent drop in the Standard & Poor’s 500 Index.

Icahn, 79, rebranded himself as an activist investor and outspoken shareholder advocate after gaining fame as a corporate raider in the 1980s. In recent years, he has taken stakes in technology-related companies including Apple Inc., EBay Inc., and Netflix Inc., and agitated for changes such as share buybacks and spinoffs, which he argued would create shareholder value.

Icahn led a lengthy fight at EBay, agitating for the Internet marketplace to spin off payments unit PayPal Holdings Inc., which it eventually agreed to do. In November, Icahn Associates Corp. disclosed it had sold the EBay stake and reported a 3.8 percent holding in PayPal. At Apple, Icahn was outspoken in demanding more cash be returned to shareholders, and the tech giant subsequently increased its dividends and stock buybacks.

The New York-based investor is worth about $19 billion, according to data compiled by Bloomberg, and primarily invests his own fortune, rather than relying on money from outsiders.

(An earlier version of this story corrected the number of board seats Icahn will receive.)

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