What happened

Shares of document management veteran Xerox (NYSE:XRX) fell 11.2% in February, according to data from S&P Global Market Intelligence. The pending merger with Japan-based Fuji Xerox -- itself a 56-year-old joint venture between Xerox and Fujifilm (NASDAQOTH:FUJIY) -- turned into a bitter feud with activist investor Carl Icahn, who has other ideas about Xerox's future.

Falling stock chart superimposed over digital map of the world

Image source: Getty Images.

So what

This drama has been going on for a while, actually. In 2016, Icahn pushed Xerox into spinning off its business process services into a new company called Conduent. Not yet satisfied with Xerox's progress, he also nominated four new directors for the company's board of directors, urging shareholders to side with his vision of faster product launches and stronger revenue growth. Xerox "desperately" needed new leadership, Icahn said in December.

As rumors of a revamped Fujifilm relationship started circulating in January, Icahn reiterated his calls for new leadership and urged Fujifilm to transfer more of the joint venture's control to Xerox. Fujifilm currently owns 75% of Fuji Xerox, leaving 25% for the American company.

Push came to shove at the very end of January. On the last day of the month, Xerox announced an all-out merger with the Fuji partnership worth $6.1 billion. Xerox shares surged 7% higher that day, creating more room to move back down in February.

Icahn and fellow activist Darwin Deason, who combine for a 15% ownership stake in Xerox, still weren't satisfied. They published an open letter together calling this deal a "scheme" that undervalues Xerox and ultimately gives Fuji full control of the combined company. Deason is suing Xerox to allow him to nominate another slate of directors even though the nomination deadline has passed, and Xerox has responded with two in-depth explanations of why this merger is the best exit strategy.

Engulfed by this miasma of uncertainty and conflict, Xerox shares lost most of that end-of-January pop and stayed down.

Now what

Icahn is not known for giving up easy, and the best guide to what happens next will probably come from the final results of Xerox's shareholder vote on the merger with Fuji Xerox. If successful, Xerox will move on to serve the Japanese market more directly. If not, the company will continue to battle these activist investors in the court of public opinion while hammering out new deal terms with Fujifilm.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.