On 13 July 2016, PrintWeek India had reported a Bloomberg TV news, which said Xerox would look to acquire RRD, and then merge parts of it within the two newly created companies Xerox is forming.

Both Xerox and RR Donnelley have announced plans of splitting its businesses into separate parts. Both the companies appeared to be drawn to some potential deals, following the breakups.

According to the Wall Street Journal (WSJ), which broke the Xerox’s no deal news, said that people familiar with the matters, RR Donnelley’s proposal structured the deal as a so called Morris Trust, describing it as a tax-efficient set-up in which Xerox would get a slight premium.

The Morris Trust transaction is an M&A technique where all assets other than those being acquired are spun off into a new public company, with the remaining assets being merged with the buyer, without incurring any corporate tax in the transaction.

The WSJ further reported that the RRD proposal called for its executives to take control, and for several hundred million dollars in new cost cuts.

The Xerox board reviewed the proposal with its advisers before telling RR Donnelley that it wasn’t interested — believing its own plan of splitting its business into two business to be less risky, the paper detailed.

In the last five days since 12 July, shares of Xerox rose from USD 9.67 to USD 9.72 at closing on 18 July, while that of RR Donnelley dropped from USD 19.75 to USD 16.62 on 15 July before rallying to USD 17.80 at the closing on 18 July.

As on 18 July, Xerox had a market cap of USD 9.85-bn, while RR Donnelley’s market cap was pegged at USD 3.62-bn.