Xerox Corp said it would split into two companies, one holding its legacy hardware operations and the other its business process outsourcing unit, in which activist investor Carl Icahn will get three board seats.
Icahn, who first revealed a stake in Xerox in November, had said he would seek representation on the company's board as well as pursue strategic alternatives. He later raised his stake to 8.13 per cent.
Xerox shares rose 4.6 per cent to $9.65 in premarket trading on Friday.
The company, whose shares had fallen more than 30 per cent in the past 12 months, has been trying to turn itself around by focusing on software and services as businesses cut costs and a switch to mobile devices hits demand for printers.
Larger rival Hewlett Packard Enterprise also split its computer and printer businesses from its faster-growing corporate hardware and services operations last year to adjust to the post-PC computing era.
Icahn has had considerable success with pushing companies to spin off their fast-growing businesses.
While eBay split its payments business Paypal Holdings, Manitowoc separated its crane manufacturing business from its food service business.
Xerox said the separation would create a $11 billion document technology company and $7 billion business process outsourcing company.
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