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Xerox/Icahn pushing ahead with HP takeover strategy: report

Xerox and major investor Carl Icahn are preparing to nominate a full board of HP directors as they try to force HP management to reconsider the $33.5 billion Xerox acquisition bid, according to new speculation on Wall Street.

xerox HP logos

“The Xerox bid to acquire HP Inc. has gone quiet headed into the holidays, but that is likely about to change,” reports leading US financial magazine Barron’s - published by Dow Jones, a division of News Corp.

On December 25, HP opened a one-month window for shareholders to make board nominations ahead of the company’s next annual meeting. 

“Evercore analyst Amit Daryanani writes in a research note that there is a ‘high probability’ that either Xerox or investor Carl Icahn will nominate a full slate of HP directors as they try to force HP management to reconsider the Xerox acquisition bid,” according to the Barron’s report.

Time 2013
 'Obvious no-brainer': billionaire Carl Icahn
      on the cover of Time magazine (2013)

Xerox has bid $22 a share in cash and stock for its larger rival, and earlier this month Xerox CEO John Visentin said the deal would in fact deliver $31 a share to HP shareholders.

Visentin’s letter to HP shareholders also revealed that Xerox has its eye on 50,000 worldwide HP Wide Format customers and an estimated 10,000 global installations of HP’s flagship printer, the HP Indigo Press.

The HP board has rejected the “aggressive and opportunistic” offer, questioning Xerox’s ability to raise the cash portion of the proposed deal. But Xerox is determined to push ahead with its plan, said the report.

“Daryanani thinks that HP shares can keep inching higher, driven by either the Xerox bid or HP’s own actions,” said Barron's. “HP has suggested that it has other options to boost its share price, including levering up its own balance sheet to do a large share repurchase. Many observers think the end goal for Xerox is to prod HP into flipping the script and making a bid for Xerox.

“Icahn will remain a player in the unfolding drama. He owns more than 10% of Xerox and sits on the company’s board; he also owns more than 4% of HP.”

In his own letter to HP shareholders, billionaire activist investor Icahn described the combination of the two companies as “one of the most obvious no-brainers I have ever encountered in my career.”

Earlier this month, Xerox shareholder the Miami Firefighters Relief and Pension Fund sued Icahn alleging he bought $1.2 billion worth of HP shares with prior knowledge that Xerox was considering acquiring its larger rival.