Xerox is separating into two independent publicly traded companies, following pressure from activist investor Carl Icahn to break up the company.

Shares of the Norwalk, Connecticut-based company were up 6.5 per cent to $9.81 US in Friday trading after the announcement.

Xerox announced in October that it planned to conduct a review of its operations in the hopes of boosting shareholder value.

The separation calls for a document technology company and a business process outsourcing company. The document technology company will handle document management and document outsourcing, while the business process outsourcing business will help companies with automating and simplifying business processes.

The names of the two companies and their leadership teams have yet to be determined.

Xerox and Icahn reached a deal on the governance of the business process outsourcing company. Under the breakup, Icahn will get to name three of the nine directors on that company's board.

A search is also going to be started for an external candidate to serve as CEO of the business. Icahn will be allowed to choose an individual to observe and advise the committee that is performing the search.

Icahn said in a written statement that he believes the independent business process outsourcing company will enhance shareholder value.

Xerox Corp. also announced a three-year plan to save $2.4 billion across all segments. It anticipates $700 million in annual savings in 2016.

Xerox said its goal is to complete the separation by the end of the year.