Famous as the brand behind the copy machine, the now-struggling Xerox will divide itself into one company grouping its hardware operations and another that will house its services business, according to the Journal.
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Under the plan announced Friday, Xerox would retain its legacy document technology division that has 40,000 employees and $11 billion in annual revenue. The WSJ said that Icahn has been pushing the Xerox board for change, and that he will receive three seats on the board of the BPO part of the business after the split.
The news comes just days after insurance giant AIG announced a deep restructuring following months of pressure from Icahn and fellow investor John Paulson, who pushed the company to split into three.
Xerox is expected to announce the split on Friday when it reports quarterly results, the Journal said.
Its shares rose 12 cents, or 1.3 percent, to $9.35 in premarket trading about 90 minutes before the market open. As the company’s CEO, Ursula Burns, explained to NPR’s Renee Montagne in 2012, you might find yourself interacting with the Xerox Corp. when you load up your E-ZPass toll-payment account or pay for a ticket for running a red light.
In November, Icahn disclosed an interest in Xerox and said he would seek negotiations with the company regarding its future. So popular was the concept and the technology that in many markets users didn’t ask for a photocopy but a “xerox” of a document. It is subject to customary conditions, approval by the Xerox board, regulatory approval, tax considerations and the securing of potentially needed financing.
The transaction is expected to be tax-free to Xerox shareholders for federal income tax purposes. The other is a business process outsourcer that will help companies with automating and simplifying business processes.
Icahn applauded the split-up on Twitter, saying it would “greatly enhance” value for shareholders.
Total revenues were $4.65 billion in the quarter, down 8 percent or 5 percent in constant currency year-over-year.
Xerox will formally split into two separate businesses later this year, in a move that signals a fresh transformation of a company that has existed since 1906.
But contract hiccups in recent years have hurt growth from the same sectors that were supposed to save Xerox. Burns explained that her role, in either company, has not yet been confirmed.
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“She made it clear that the document business remains strong and Xerox remains committed to Rochester, and she actually said in many ways the document business is more profitable than the business outsourcing business, which is not in Rochester”.
