NEW YORK CITY: US printer maker Xerox said over the weekend it was splitting into two publicly traded companies after coming under pressure to boost performance from Wall Street activist investor Carl Icahn.
Xerox said it would divide into a document technology company, including its printer and imaging businesses, and a business services company, with the separation expected to be completed this year.
It will also give three board seats to Icahn after enduring weeks of pressure from the veteran corporate raider.
Icahn announced in November he had increased his stake in Xerox to 8.1 percent, the second-largest shareholding and began openly pushing the struggling printer maker to improve performance and adapt new strategies.
Xerox said it had decided the move after a strategic review begun in October following a sharp loss in the third quarter. It said the leadership and the names of the hardware and services companies would be determined later.
“Today Xerox is taking further affirmative steps to drive shareholder value by announcing it will separate into two strong, independent, publicly traded companies,” said chairman and chief executive Ursula Burns in a statement.
Burns, in a television interview with Bloomberg, said that the board had made its unanimous decision to split the company without input from Icahn.
“The board did its analysis and came to its conclusion without speaking to Mr. Icahn at all. Fortunately when we did speak to him, as you know he’s a large holder of our shares, he agreed with the outcome we reached,” she said.
Icahn applauded the split-up on Twitter, saying it would “greatly enhance” value for shareholders.
“Happy to announce we reached an agreement with [Xerox] re: separation into two independent public companies,” he tweeted.
The Norwalk, Connecticut-based company made the announcement as it reported profit for the fourth quarter but a loss overall for 2015.
Fourth-quarter earnings rose to $285 million from $200 million a year ago, despite an eight percent decline in revenues to $4.65 billion.
For all of 2015, earnings plunged 52 percent to $488 million from $1.0 billion in 2014. Revenues fell eight percent to $18.0 billion.
Xerox said it would increase its quarterly dividend 11 percent to 7.75 cents per share of common stock.