Xerox splits into two companies, Icahn not behind move
Fri 29 Jan 2016
Printer and copier maker Xerox has announced its plans to split into two separate publicly traded companies, giving billionaire Carl Icahn three board seats in the settlement. CEO Ursula Burns has now claimed that the decision was not driven in any way by the activist investor.
Shares in the company remained flat in pre-market trading following a 5% jump immediately after the notice.
Icahn stated that he holds a 9.12% stake in Xerox, an increase from the 8.13% reported last month. He tweeted this afternoon: “I hope and believe the results will be just as good for $XRX shareholders.”
Burns confirmed that the company had begun looking into its structure and portfolio from October 2015, in order to better reflect changes in the market. She added that no conversations with Icahn took place prior to these reviews, or before it made the final call.
Xerox will now be divided into a new business process outsourcing company, and a document technology firm. Burns explained that her role, in either company, has not yet been confirmed. However now that the split is being implemented, leadership discussions will be held shortly, she said.
Previously, Xerox shares had fallen over 30% in the last 12 months, and the company has been pushing efforts to shift its focus towards software and services to cover its losses. The division is expected to allow Xerox more flexibility to respond to market trends, with each unit recording individual growth rates and capital investment requirements.
Areas that Xerox hopes to address include the healthcare services industry, international developments in the services market, and the significant shifts in how individuals are putting technology to use around the globe.
Burns admitted that the strength of the U.S. dollar was a factor in the decision. Over half of the company’s 100,000 employees are positioned outside of the U.S., so a strong dollar is beneficial. She explained however that the strong dollar could also make some Xerox products more expensive for foreign purchase.