Matter of Xerox Corp. Consolidated Shareholder Litig.
The case concerns a proposed transaction where Fujifilm Holdings Corp. would acquire a 50.1% controlling interest in Xerox Corp. for no cash payment to Xerox shareholders. Major Xerox shareholders, including Darwin Deason and several pension funds, sought preliminary injunctions, alleging that Xerox CEO Jeff Jacobson was conflicted during negotiations, prioritizing his self-interest in retaining his CEO position, and that the Xerox Board failed its fiduciary duties by approving a deal disproportionately favorable to Fuji. The court found a likelihood of success on claims that Jacobson breached his fiduciary duties and that the Board failed to properly supervise him, leading to a "cashless acquisition" for Fuji, which the court stated "enabled Fuji to 'take control of Xerox without spending a penny.'" Consequently, the court granted preliminary injunctions, enjoining the proposed transaction and mandating the waiver of Xerox's advance notice bylaw deadline to allow shareholders to nominate an alternative slate of directors, allowing shareholders a fair opportunity to consider nominations given the material, post-deadline changes and the egregious terms of the proposed control transfer.