How Not to Negotiate a $6.1 Billion Deal


The Xerox-Fujifilm formula: 1. Tell CEO he’s fired. 2. Have him arrange sale of company. 3. Hope Carl Icahn doesn’t find out.

By midsummer, the board had concluded that Jacobson was incapable of leading Xerox. While he continued to talk with Fuji, they were interviewing replacement candidates. On Nov. 10, Keegan and Jacobson met in Westchester, N.Y. They talked amicably for a few minutes about the chairman’s recent foot surgery, then Keegan told Jacobson the board had given up on him. Although Keegan didn’t mention it, they’d already settled on a successor: former IBM and HP executive Giovanni “John” Visentin. Keegan told Jacobson to stop his talks with Fuji. But Fuji executives were scheduled to fly to New York a few days later. When Jacobson tried to cancel, Kawamura told him Komori “would be very disappointed” and might break off the talks. After reading the texts, forwarded to him by Jacobson, Keegan relented. Jacobson could go to the meeting, and they’d see where things went.

Most of Xerox’s board remained unaware that the CEO they thought they’d dismissed was still working to sell the company. That changed on Nov. 30, when Fuji sent over a term sheet outlining its offer. Several days later, Cheryl Krongard, a retired banker who’d been appointed to the board at Icahn’s request, sent Keegan a handwritten cri de coeur entitled “4 sleepless nights.” “We have a rogue executive,” she warned, unaware that Keegan had approved the continued conversations.

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