Fujifilm Holdings Corp. failed to persuade a Manhattan state judge to dissolve an order barring its planned merger with Xerox Corp., cutting off a possible option for keeping the deal alive.

The company has claimed in a separate lawsuit it will suffer $1 billion in damages if it can’t cement the $6.1 billion takeover, which was thwarted by activist investors Carl Icahn and Darwin Deason. Deason sued Xerox in February in Manhattan state court to block the acquisition, accusing its former CEO Jeff Jacobson of acting without authorization to strike a deal that preserved his job at shareholders’ expense.

The judge’s decision is the latest in the monthslong drama for control of the American company that has been punctuated by lawsuits and maneuverings from each side. Fujifilm continues to believe a combination between Xerox and its existing joint venture is the best solution, while Icahn and Deason are considering options to draw higher bids.

Shares of Fujifilm were down 1.8 percent at ¥4,206 a share in afternoon trading in Tokyo on Friday. Xerox shares closed down 2.9 percent in New York on Thursday.

Manhattan Supreme Court Justice Barry Ostrager issued an injunction in April blocking Fujifilm’s takeover of Xerox from moving forward until the lawsuits were settled. Xerox has since dropped its plans to pursue the deal as part of an agreement with the activist investors.

Fujifilm appealed Ostrager’s ruling in May. This week, Tokyo-based Fujifilm also filed a lawsuit in Manhattan federal court claiming damages from the termination of the merger. The company said in the suit that it didn’t seek to force Xerox to follow through on the deal in light of the injunction, but expected the order would be dissolved.

Fujifilm said it would unfairly be the only party subject to the injunction, as the activist investors and Xerox are no longer at odds and seeking to end their legal dispute. If the injunction were only left in place for Fujifilm, Xerox and the investors would be free to “attack” the Japanese company, Fujifilm claimed, and asked for it to be dissolved.

Ostrager told lawyers for the companies that they could seek to litigate their case on the merits to determine if the injunction should be lifted, and he would otherwise leave it in place.

“We are confident that the court will agree that all Xerox shareholders ought to decide for themselves the operational, financial and strategic merits of the transaction,” Fujifilm said in a statement Friday.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.