The planned sale of Xerox Corp to Japanese rival Fujifilm Holding Corp has been temporarily blocked by a New York judge who determined the chief executive officer behind the deal was trying to preserve his own job. Judge Barry Ostrager said in his order that the Xerox ceo Jeffrey Jacobson was ‘hopelessly conflicted’ in the deal. Xerox, which has a market value of $7.7 billion, says it will ‘immediately appeal’ the decision.

Shareholder value compromised
An investor Darwin Deason sued to block the transaction, accusing Mr Jacobson of acting without authorisation to strike a deal with Fujifilm which preserved his job at the expense of shareholder value. Deason, Xerox’s third-largest shareholder with a $600 million stake, argued that the deal fails to maximize value for investors. Carl Icahn, identified in the order as Xerox’s largest shareholder, also opposed the deal.

“Hopelessly conflicted”
The judge stated the facts “clearly show that Jacobson, having been told on 10 November that the board was actively seeking a new ceo to replace him, was hopelessly conflicted during his negotiations of a strategic acquisition transaction that would result in a combined entity of which he would be ceo.” He said ample evidence suggested the ceo collaborated with Fuji “to make himself indispensable to the transaction.” Xerox had argued in a court filing that Jacobson didn’t have a conflict of interest and New York law did not allow Deason and his lawyers at King & Spalding to second-guess the board’s business judgment.