The two companies had announced earlier this year that Fuji Xerox, their 56-year-old joint venture, would combine with Xerox, with Fujifilm Holdings taking a 50.1 per cent stake in the newly formed company, New Fuji Xerox. The deal was meant to be part of a restructuring that, along with other reforms, would save the companies an estimated $1.7bn a year by 2022.

But Xerox have now terminated the because of Fujifilm's failure to enter into negotiations on improved terms over the $6.1bn offer.

"Over the past several weeks, the Xerox Board has repeatedly requested that Fujifilm immediately enter into negotiations on improved terms for a proposed transaction. Despite our insistence, Fujifilm provided no assurance that it will do so within an acceptable timeframe," Xerox's former board said in a statement.

As part of a settlement agreement with Icahn and Deacon, Xerox has appointed five new board members and a new CEO, John Visentin – who has been on the verge of being appointed twice before – to replace Jeff Jacobson, who resigned as CEO and as a board member. Visentin is a senior exec with Apollo wealth management fund, which is itself interested in buying Xerox.

Icahn and Deason had opposed Fujifilm's takeover, arguing it undervalued Xerox, and had called for Jacobson's resignation. Both praised Xerox's decision to pull out of the deal.

"We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm," Icahn said in a statement.

Deason said, "Xerox is now positioned to conduct a true, robust strategic alternatives process."