Xerox said to be splitting in two; Icahn to get board seats

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.

The Financial Times report that billionaire United States investor Carl Icahn had pushed for the move.

“These two companies will be well positioned to lead in their respective rapidly evolving markets and capitalize on the opportunities that now exist to expand margins and increase market share”, Burns continued.

Icahn has amassed a 9.12% stake in Xerox, making him the largest shareholder ahead of Vanguard.

The planned breakup follows pressure from activist investor Carl Icahn. In the third quarter of 2015, Xerox services’ businesses recorded an operating loss of $184 million, largely the result of Xerox taking a $241 million charge after taxes to end its operation of California’s Medicaid system and one in Montana. The company brought the Xerox 941 to market in 1959 and changed its name to Xerox two years later.

The Document Technology company will concentrate on the automation hardware Xerox is most noted for and the Business Process Outsourcing company will center on business services.

“This is absolutely a good thing for the reseller community”, said Steve Jenkins, president of Xerox partner Precision Document Solutions of Carrollton, Texas, likening it to the split past year of Hewlett-Packard into HP Inc. and Hewlett Packard Enterprise.

“The benefits of separation outweigh the benefits of the current structure”, she said, calling each of the two groups “strong businesses” that face “different market realities”. Profit, excluding some items, was 32 cents a share, beating the average analyst estimate of 28 cents.

In a separate press release, Xerox said that its board has unanimously approved management’s plan to separate Xerox into two independent publicly- traded companies.

Shares in Xerox jumped five percent to $9.69 in early trade.

The document technology company past year generated roughly $11 billion in revenue, while business services generated roughly $7 billion. Document technology dropped 13 or 10 percent in constant currency.

Xerox Corp. also announced a three-year plan to save $2.4 billion across all segments.

For all of 2015, earnings plunged 52 percent to $488 million from $1.0 billion in 2014. Three equities research analysts have rated the stock with a sell rating, four have issued a hold rating and five have issued a buy rating to the company’s stock. He has been critical of inversions, where a U.S. company merges with a foreign company and moves its headquarters overseas to take advantage of lower corporate tax rates.