Xerox to split into two, give Icahn 3 board seats

Xerox plans to transform into two publicly traded companies with different focuses: one, a document technology company with revenues of around $11 billion (as of 2015), and the other, a $7 billion services organization specializing in business process outsourcing.

Mr Icahn, the billionaire investor who disclosed a Xerox stake in November that now stands at more than 8 per cent, will select three directors on the service company’s board, according to a separate statement.

Xerox also announced a three-year plan to save $2.4 billion across all segments. The company reported adjusted earnings per share (EPS) of 32 cents in the quarter ending December 31, above the expectations of both Xerox and financial analysts.

The separation calls for a document technology company and a business process outsourcing company. With approximately $7 billion in 2015 revenue – more than 90% of which is annuity based – the company is focused on attractive growth markets including transportation, healthcare, commercial and government services.

Its Document Technology segment offers desktop monochrome and color printers, multifunction printers, copiers, digital printing presses, and light production devices; and production printing and publishing systems for the graphic communications marketplace and large enterprises. As for her role, Burns said that discussion is “purposefully… off the table”, she told Bloomberg TV. We asked George Conboy of Brighton Securities how a company might achieve such steep savings.

Xerox Corporation provides business process and document management solutions worldwide. On a GAAP basis, net income was $285 million, or $0.27 per diluted share, compared to $349 million, or $0.30 per diluted share, for the same period previous year.

Xerox began as the “Haloid Company” 100 years ago in Rochester, New York. As the company’s CEO, Ursula Burns, explained to NPR’s Renee Montagne in 2012, you might find yourself interacting with the Xerox Corp. when you load up your E-ZPass toll-payment account or pay for a ticket for running a red light.

Xerox’s shares price rose almost 6% on Friday following the announcement.

The company-worth only $9.34 billion-has annual sales worth $20 billion. While Xerox took on debt to buy ACS, she defended the deal as a way to deliver more consistent revenue streams that would offset shrinking profits in the hardware business.

“I’m very positive about it”, Justice said.

Moody’s Investor’s Service said it would put its ratings for Xerox on review for a possible downgrade, saying that the planned separation will result in two smaller, less diverse and less profitable companies than the existing Xerox.

In line with this strategy, the company said in August past year it had signed a definitive agreement to acquire RSA Medical, a provider of health assessment and risk management for members interacting with health and life insurance companies.