The new company named Business Process Outsourcing would have six directors chosen by Xerox, two of which can be current board of director members and three chosen by Icahn, according to a company statement.
Advertisement
The separation calls for a document technology company and a business process outsourcing company. Under the proposed plan, Icahn will get three seats on the services company’s board, The Wall Street Journal reported. Icahn took up an interest in Xerox in November with a stake of 72,218,801 shares and said in a related securities filing that he planned to have discussions with its board regarding “improving operational performance and pursuing strategic alternatives, as well as the possibility of board representation”.
Xerox Corp. has announced it will break up into two independent, publicly-traded companies. The latter has about 104,000 employees and produced about $7 billion in revenue past year. The company has warned its document division revenue could fall as much as 7% in 2015, excluding the impact of exchange rates.
So, what’s Xerox’s strategy behind the split into two separate companies?
Xerox announced Q415 earnings this morning.
Xerox shares rose 4.6 percent to $9.65 (roughly Rs. 655) in premarket trading on Friday.
Xerox’s net income fell to $US488 million past year from more than $US1 billion in 2014.
In October, after years of sales and profit declines, Chief Executive Ursula Burns said the company was conducting a strategic review of its operations.
Regardless, this move fundamentally changes the investing thesis for Xerox given that it will turn into a pair of separate companies. The Company’s Document Technology segment includes the sale of products and supplies, as well as the associated technical service and financing of those products. The vendor added that being its own company will allow the BPO firm it to adapt to customer needs and refine its portfolio for greater margin.
“At this point we should be in a period of careful watching, but not panic in any way, ” Schumer said Saturday.
Xerox bought ACS at a time when leading technology companies, including Hewlett-Packard and Oracle, were attempting to expand through large acquisitions and become “one-stop” providers of tech hardware and services to big corporate customers.
The stock has fallen more than 30 percent in the past year. Indeed, years ago its researchers at Xerox’s Palo Alto Research Center were responsible for developing many technologies that are still in use today, including Ethernet and the graphical user interface.
Advertisement
Xerox is finalizing the transaction structure and said it hopes to complete the separation by the end of the year. “I have instructed our teams to begin work immediately to deliver the efficiencies needed to achieve our goal”, said Burns in the company’s press release.
