Xerox to split into two publicly traded companies

Xerox, in an agreement with investor Carl Icahn, is splitting into two publicly traded companies – essentially breaking out the operations acquired with its largest-ever purchase five years ago.

The division will create an $11 billion document technology company that includes the namesake copier and scanner hardware, and a $7 billion provider of services to government and industries such as healthcare and transportation, Xerox said on Friday in a statement.

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

Shares rose 1.8 per cent to $9.40 in pre-market trading, after earlier rising as much as 6.7 per cent. Xerox fell 13 per cent this year through Thursday.

Xerox is planning to cut costs over the next three years that will result in $2.4 billion in savings across the two companies, of which $700 million is expected for 2016.

Xerox reported fourth-quarter revenue of $4.7 billion, in line with the average analyst estimate. Profit, excluding some items, was 32 US cents a share, beating the average analyst estimate of 28 cents.

Xerox reported full-year revenue of $18 billion. Sales from services, which includes business process and document outsourcing, fell 4.7 per cent to $10.1 billion. Document technology revenue dropped 12 per cent to $7.4 billion.