Xerox's headquarters and corporate logo. How its operations will be run, post-split have yet to be announced. (Image by Douglas Healey/AP Images)

Xerox Announces Stock Split; Company to Emerge as Two Publicly-Traded Firms

Xerox announced plans for a stock split that will see it divided into two separate, publicly traded companies.

The brand – which has become as synonymous with photocopies as Kleenex has with facial tissue – plans to spin off separate “Document Technology” and “Business Process Outsourcing” businesses that will be valued at $11 billion and $7 billion, based on the company’s 2015 financial figures, respectively.

The move, according to The Wall Street Journal, also serves to help in “reversing an effort by a century-old company to marry business services with its copiers and printers.”

Xerox was founded in 1906 and is headquartered in Norwalk, Connecticut.

Per a company press release, the stock split is expected to be completed by the end of 2016.

According to company chair and C.E.O. Ursula Burns, Xerox’s stock split decision can be categorized as “the right path forward for our company.”

“Today Xerox is taking further affirmative steps to drive shareholder value,” noted the C.E.O.. “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.”

Xerox CEO Ursula Burns recently outlined her company's plan for a stock split that would split the famed photocopier maker into two separate, publicly-traded companies.(Photo by Matt Sayles/Invision for UCLA Anderson/AP Images)
Xerox CEO Ursula Burns recently outlined her company’s plan for a stock split that would split the famed photocopier maker into two separate, publicly-traded companies. [Photo by Matt Sayles/Invision for UCLA Anderson/AP Images]

In particular, Burns noted the Xerox stock split will have several positive effects on the company, including: (a) improving its strategic and operational focus; (b) streamlining its organizational structure and resources; (c) providing more clear financial profiles for investors; and (d) making more compelling cases for equity investment by shareholders.

While much of the specifics regarding the two companies are still not known, Xerox did reveal a few details. The as-yet unnamed Document Technology firm, for example, will focus on document management and document outsourcing services. The also unbranded Business Process Outsourcing company will offer management services for transaction processes, in addition to helping client organizations streamline their own business processes by providing access to several different back-office functions.

In particular, Xerox’s Document Technology unit employs 40,000 people and encompasses the core printer and photocopier business for which it is best known.

Although the key executives for each unit will not be released until a later date, WSJ did note that billionaire investor Carl Icahn will hold a seat on one of the units’ boards. It was Icahn, many believe, who influenced company executives to extend investor value through an independent business process outsourcing company.

Xerox's stock split will see Carl Icahn be given more power over both the company's board and its operations. (Image by Henny Ray Abrams/AP Images
Xerox’s stock split will see Carl Icahn be given more power over both the company’s board and its operations. [Image by Henny Ray Abrams/AP Images]

Per The Associated Press and KCBD, Xerox and Icahn had been negotiating a deal that would have given the independent financier a greater role in the company’s operations, post-split. Reports indicate that Icahn will be given power to name three out of nine directors on one of the company’s boards, and will also nominate another executive “to observe and advise the committee that is performing the search [for an external-candidate CEO].”

The decision, which could ultimately affect Xerox’s employees, comes about following an internal review of its portfolio and capital spending options that was conducted last October. It is also an all-to-common move among larger companies, such as computer manufacturer Hewlett-Packard, which underwent its own stock split into the separate, publicly traded companies HP, Inc. and Hewlett-Packard Enterprise late in 2015.

Xerox also announced a strategic, three-year “Strategic Transformation Program” through which it will look to save $2.4 billion over all lines of operation. The company noted it expects as much as $700 million in annualized savings in 2016 alone. Marketwatch, meanwhile, noted that Xerox “built its business by inventing new machines–such as the photocopier and the laser printer–and pushing companies to buy more office machines supplied with pricey ink and toner … But it endured bruising battles with U.S. and overseas rivals that triggered layoffs and restructurings.”

Xerox’s current board of directors has already approved the company’s stock split.

[Image by Douglas Healey/AP Images]

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