Xerox to Split Into Two Companies

Activist investor Carl Icahn will get three board seats.

By Reuters

REUTERS | Brendan McDermid

This story originally appeared on 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.

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. 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. split its payments business Paypal Holdings Inc., while Manitowoc Co Inc. 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.

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)

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

Business News

I'm a Former Google Recruiter. Here's How to Land a Job in Tech — and What Can Blow Your Interview

A former Google recruiter says layoffs may be trendy, but tech workers are always needed. Here's how to land a job at a major tech company.

Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Leadership

What You Should Actually Do If You're Accused of Gaslighting

Gaslighting is a negative term that can follow you forever. You need to fight back before the label sticks.

Starting a Business

5 Ways Entrepreneurship Can Help Teenagers Overcome Negative Peer Pressure

Here are some of the positives teenage entrepreneurship can have concerning peer pressure.

Business News

'Could This Be True?': Blockbuster Might Be Teasing a Surprise Comeback

The company has shuttered all of its locations except for one in Bend, Oregon.