Icahn Notches Win as Xerox Plans to Split into Two Parts

Jan 28 2016 | 8:35pm ET

In a win for activist investor Carl Icahn, Xerox plans to split into two publicly traded companies in an effort to narrow its focus and trim its operations.

The split will divide the century-old company, known for its copiers and printers, into a hardware business and a services business, according to the Wall Street Journal citing unidentified people familiar with the matter. As part of the restructuring, Icahn will receive three seats on the board of directors for the services company.

The official announcement of the decision could come as early as Friday, when Xerox releases quarterly earnings.

Icahn revealed an initial 7.1% stake in Xerox back in November following the decision by CEO Ursula Burns to initiate a strategic overview, calling the company undervalued. Now owning more than 8% of the company’s shares, he is Xerox’s second-largest shareholder after Vanguard Group.

Discussions between Icahn and Xerox management about the split have been characterized as amicable, noted the Journal. Burns was initially reported to be against separating the two businesses, seeing value in having them both under one roof, but did note in October that the structure was one of the things that would be analyzed during the review. 

Like many large first-generation technology businesses, Xerox now makes more money from its datacenters and other services than it does from its branded copiers and printing equipment. The hardware side of the company has been sliding for some time, dragging down earnings and sales for Xerox, which is expected to report its fourth consecutive year of lower results on Friday. The company’s stock has been hammered as a result, falling 25% in 2015 and a further 13% so far in 2016, the Journal reported. 

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