In re Xerox Corporation Consolidated Shareholder Litigation

Court: Supreme Court of the State of New York, County of New York
Case Number: 650766/2018
Judge: Barry R. Ostrager
Case Contacts: Mark Lebovitch, Edward G. Timlin

On January 30, 2018, Xerox Corporation (“Xerox” or the “Company”) announced a change-of-control transaction with FUJIFILM Holdings Corporation (“Fuji”), whereby Fuji would acquire a majority stake in Xerox without providing any of its own cash to stockholders, instead paying for the stake by borrowing against Xerox’s balance sheet and contributing its ownership interest in a scandal-ridden Fuji/Xerox joint venture. 

On February 15, 2018, BLB&G filed a class action complaint on behalf of Asbestos Workers Philadelphia Pension Fund and all similarly situated Xerox stockholders, alleging breaches of fiduciary duty by the Xerox board of directors and certain of its management (the “Xerox Defendants”) for entering into the unfair transaction.  Following a hotly contested, expedited discovery process, BLB&G participated in a two-day, live-evidence preliminary injunction hearing in front of Justice Barry Ostrager of the New York State Supreme Court, New York County on April 26 and 27, 2018.  The Court enjoined the transaction on April 27, 2018, finding a substantial likelihood that the Xerox Defendants breached their fiduciary duties.    

After several rounds of intensive negotiations, BLB&G reached an agreement in principle to settle the claims against the Xerox Defendants on May 13, 2018.  As part of the settlement, (i) Xerox CEO Jeffrey Jacobson immediately resigned and forfeited over $20 million in “golden parachute” payments; (ii) five additional directors who were found likely to have breached their duties also resigned; (iii) four new independent directors identified by proxy contestant Darwin Deason were added to the board; (iv) Xerox waived its “advance notice bylaw,” effectively allowing stockholders to nominate their own replacement directors in the event they were dissatisfied with Mr. Deason’s candidates; (vi) Xerox scheduled a prompt stockholder meeting to elect directors for July 2018, permitting stockholders to weigh in on both the surviving directors from the old board and those appointed in connection with the settlement; and (vii) the reconstituted board agreed to explore a superior change-of-control transaction expeditiously. 

On June 18, 2018, the parties entered the Stipulation and Agreement of Settlement (the “Stipulation”), which was slightly amended on July 12, 2018.  A copy of the operative Stipulation can be found at the “Case Documents” link on this page.  Notice of the proposed settlement was mailed to stockholders beginning June 3, 2019.  The Court has scheduled a final approval hearing for the proposed settlement for September 6, 2019 at 9:30 a.m. at Supreme Court, New York County, 60 Centre Street, Room 232, New York, NY 10007.

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