Carl Icahn urges 'no brainer' merger of HP and Xerox

Carly Page
@CarlyPage_
14 November 2019

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BILLIONAIRE ACTIVIST INVESTOR Carl Icahn is pushing for HP to accept Xerox's takeover offer, claiming it's a merger between the two firms is a "no brainer".

Icahn, who owns a 10.6 per cent stake in Xerox, told the Wall Street Journal that he also owns 4.24 per cent of HP, valued at roughly $1.2bn, a stake that he's now leveraging to push for a merger between the two firms.

"I think a combination is a no-brainer," Icahn told the WSJ, adding in that he strongly believes "in the synergies" the two companies would enjoy if they combined.

"There will probably be a choice between cash and stock and I would much rather have the stock, assuming there's a good management team," he added.

Icahn's remarks come after Xerox - which itself is worth $8bn - last week made a $33bn offer to acquire HP, more than three times the market value of the printer maker. HP acknowledged that it had received an acquisition offer from Xerox, but didn't disclose the offer price.

"We have great confidence in our multi-year strategy and our ability to position the company for continued success in an evolving industry, particularly given the multiple levers available to drive value creation," a spokesperson said.

"Against this backdrop, we have had conversations with Xerox Holdings Corporation from time to time about a potential business combination... Most recently, we received a proposal transmitted yesterday [Tuesday].

"We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders."

HP is currently battling with its flailing printer business; the division's revenue for the third-quarter dropped five per cent year-on-year, despite the 2016 acquisition of Samsung's printer business.

What's more, the company last month announced that it was planning to cut up to 9,000 jobs, almost 16 per cent of its 55,000-employee global workforce, by the end of 2022.

Xerox believes it can achieve up to $2bn in annual cost savings after acquiring HP. While it hasn't detailed exactly where those cuts would fall, those savings would almost certainly come from a combination of staff cuts and squeezing the supply chain. µ