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UPDATE 1-Fuji deal 'dramatically undervalues' Xerox, say Icahn and Deason

(Adds details from Icahn and Deason's letter, Deason's stake raise, share movement)

Feb 12 (Reuters) - Xerox Corp shareholders Carl Icahn and Darwin Deason strongly criticized the printer and copier maker's plan to sell itself to Japan's Fujifilm Holdings , saying the transaction "dramatically undervalues" Xerox.

Shares of Xerox were up nearly 2 percent at $30.06 in early trading on Monday.

"We urge you our fellow shareholders do not let Fuji steal this company from us," Icahn and Deason said in an open letter. (http://bit.ly/2skuvYM)

The top shareholders termed the deal structure as "tortured (and) convoluted."

In an emailed statement, Xerox told Reuters it considered several other options in detail and concluded that the combination with Fuji Xerox is the "best path to create value" for the company.

The two investors said there is still great opportunity for Xerox to create "enormous value for shareholders, and it does not involve selling control to Fuji without a premium."

On Jan. 31, Fujifilm said it was set to take over Xerox in a $6.1 billion deal and combine it into their existing joint venture, Fuji Xerox.

"To put it simply, the current board of directors has overseen the systematic destruction of Xerox, and, unless we do something, this latest Fuji scheme will be the company's final death knell," Icahn and Deason said in the letter.

Deason in a regulatory filing said on Monday he has raised his stake in Xerox to 15.2 percent from 6 percent. http://bit.ly/2ssI9cF

Icahn has a 9.7 percent stake in Xerox as of Jan, 22, according to Thomson Reuters data.

The two investors in their letter highlighted their concerns about becoming passive minority owners of a Fuji subsidiary if the deal with Xerox proceeds.

Fujifilm was not immediately available for comment. (Reporting by Supantha Mukherjee and Laharee Chatterjee in Bengaluru; Editing by Maju Samuel)