Xerox
to split into two, Icahn to get board seats in one
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[January 29, 2016]
(Reuters) - Xerox Corp said it would
split into two companies, one holding its legacy hardware operations and
the other its business process outsourcing unit, in which activist
investor Carl Icahn will get three board seats.
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Icahn, who first revealed a stake in Xerox in November, had said he
would seek representation on the company's board as well as pursue
strategic alternatives. He later raised his stake to 8.13 percent.
Xerox shares rose 1.8 percent to $9.40 in premarket trading on
Friday.
Xerox Chief Executive Ursula Burns told CNBC that Icahn had nothing
to do with the initiation of the split.
The company, whose shares had fallen more than 30 percent in the
past 12 months, has been trying to turn itself around by focusing on
software and services as businesses cut costs and a switch to mobile
devices hits demand for printers.
Larger rival Hewlett Packard Enterprise Co <HPQ.N> also split its
computer and printer businesses from its faster-growing corporate
hardware and services operations last year to adjust to the post-PC
computing era.
Icahn has had considerable success with getting companies to spin
off their fast-growing businesses.
Under pressure from the billionaire, eBay Inc <EBAY.O> split its
payments business Paypal Holdings Inc <PYPL.O>, while Manitowoc Co
Inc <MTW.N> separated its crane manufacturing business from its food
service business.
Burns, who took the helm in 2009, said on Friday her role was yet to
be determined.
Under Burns' leadership, Xerox took a leap into the services market
in 2010 with its $6.4 billion acquisition of Affiliated Computer
Services Inc.
Xerox, which came into prominence with the launch of the 914 photo
copier in 1959, said the leadership and names of the new companies
were yet to be decided.
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The company said the document technology company, which will make
printers and copiers, would have annual revenue of $11 billion,
while the business process outsourcing company would have $7 billion
in revenue.
The split, expected to be complete by the end of 2016, will deliver
$2.4 billion in savings over next three years across both companies.
Xerox also posted fourth-quarter results, with profit rising 42.5
percent and costs and expenses falling 7.3 percent.
Lazard and Goldman Sachs are advising Xerox.
(Reporting by Kshitiz Goliya and Supantha Mukherjee in Bengaluru;
Editing by Saumyadeb Chakrabarty)
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