Xerox has made a public announcement that it will be splitting into two publicly traded companies. Amid industry speculations that Carl Icahn influenced the deal, Xerox CEO, Ursula Burns, in an interview clarified that Carl, who will be having three board seats, had nothing to do with the initiation, contemplation, analysis or any discussion around the deal. She insisted that the billionaire investor was not the driving force in the decision. She added that he was in support of it.
Xerox initiated a review of its structure and portfolio in October to address changes it saw in the market. Now, as per the recent development, Xerox will be divided into a business process outsourcing operation and a document technology company. Though the position of Burns is yet to be ascertained in the future business, Xerox is in the implementation phase and will decide on the leadership and names of the companies later.
The split will allow Xerox to be more flexible and responsive, said Burns. Though she didn’t deny the company fielding any reasonable buyout offer for the two new businesses, she said present plans are to lead both entities to success separately.
A large part of the business process outsourcing division would be Affiliated Computer Services, which Xerox purchased for $6.4 billion in 2010. The business Process outsourcing company will become its own publicly traded company by the end of the year, according to a statement by Xerox. The remaining Xerox, which is Document Technology, will include the hardware that made its name synonymous with photocopying decades ago, like scanners, printers and copy machines.
Carl Icahn had lately started amassing a stake in Xerox that reached 8.13 percent by December. The activist investor believed Xerox’s shares were undervalued and pursued discussions with management to improve operational performance and other alternatives that he thought could improve the company’s worth for shareholders.
Xerox also announced that it would aim to save $2.4 billion as part of a “strategic transformation program” across all of its segments over the next three years, $700 million of which it expected to be achieved in 2016.
Industry experts are already comparing the split with that of HP which separated its computer and printer businesses from its corporate hardware and services operations. Based in Norwalk, Conn., Xerox has more than 140,000 employees worldwide.
