Carl Icahn and Darwin Deason, shareholders in Xerox who oppose an agreed deal with Fujifilm, said they would consider an all-cash bid of at least $40 per share — a 43 percent premium to the Japanese firm's offer.
In setting a minimum price tag on Xerox, the billionaire investors have thrown the ball back into Fujifilm's court while also gaining time to woo other investors after Xerox failed on Monday to gain a quick appeal to a temporary court order blocking the deal.
While some analysts say Fujifilm would be better off putting its money into its non-copier and printer businesses, others argue that the Japanese firm, which relies on its joint venture with Xerox for nearly half of its revenue, should cede to the activist shareholders' demands.
"It's not cheap, for sure," said Masahiko Ishino, an analyst at Tokai Tokyo Research Center. "But for Fujifilm, it's still better than a complete collapse of the deal, which could mess up Xerox in a major way. Fujifilm shouldn't waste this opportunity."
Icahn and Deason, who together own about 15 percent of Xerox, oppose a complex $6.1 billion deal that would give Fujifilm control of the U.S. copier and printer maker and values it at about $28 per share.
The current deal structure calls for Fujifilm to de facto gain control in exchange for a stake in their joint venture — a transaction that would not involve any cash outlay from the Japanese firm.
The activist investors are "confident other potential buyers are waiting in the wings" and see the possibility of similar or better value in a standalone Xerox, they said in an open letter to shareholders — a letter where they also attacked Xerox's board for going back on an agreement to settle their dispute.
Apollo Global has approached Xerox to express interest about a possible acquisition, people familiar with the matter have told Reuters.
Xerox, which will now have to wait till September before its appeal can be heard, declined to comment on the letter.
Fujifilm said in a statement it believes it will win its own appeal to the injunction blocking the deal, adding that the current deal valuations were fair. A spokeswoman for the company said it was not in any talks to renegotiate the deal with Xerox but declined to comment further.
Fujifilm and Xerox have become heavily reliant on each other through their joint venture Fuji Xerox, and many analysts argue the two businesses are inextricably intertwined.
The venture, 75 percent owned by Fujifilm, is focused on Asia — the region with the highest growth potential — but also handles contracts that supply global clients with Xerox services in the United States and Europe, and Fuji Xerox services in Asia.
Moreover, Xerox no longer builds its own office copiers, instead relying mostly on Fuji Xerox, while Fuji Xerox is also seen as needing Xerox's brand power to boost its presence in China and other parts of Asia.
Xerox first agreed to a deal with Fujifilm in late January but then sought better terms at the behest of Icahn and Deason, who gained the court order last month to temporarily block the deal.
Granting the order, a New York judge agreed that CEO Jeff Jacobson had been "hopelessly conflicted" in negotiating a deal that would put him in charge since he knew the board was looking to replace him.
In a dramatic turn of events last week, Xerox agreed to fire Jacobson and part of its board to settle the litigation with Icahn and Deason. But it then said the agreement had expired over last-minute issues that arose in negotiations with the judge overseeing the case that made the parties unable to finalize their settlement.
A source familiar with the matter has said Xerox's board let the settlement expire because it came to believe it had the flexibility to renegotiate a deal with Fujifilm.
Xerox's shares closed little changed at $28.46 per share on Monday. Fujifilm's shares finished 1.5 percent higher on Tuesday.