Xerox Getting Closer to Icahn Share-Demand Price

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Last week, we explained how, in our opinion, it’s a good bet that HP Inc. will purchase Xerox. While we believe it will probably be HP, it’s an even surer bet that Xerox will be sold – if not to HP, then most likely to a private-equity company(ies) – or to both.

The Carl Icahn plan that we’ve seen before is to boost a company’s share price and then sell. Icahn has stated that he wants a very ambitious $40 per share for Xerox. But this may be more achievable than it at first seemed. Fueled by Xerox’s cost-cutting measures, Xerox’s share price is on the upswing, with its share price rising from a low of $18.92 in December 2018, to almost double that today at $32.01 Maybe Icahn won’t get $40 per share, but instead get $35 per share – which could still be attractive, as it’s more than the approximate $29 per share that Icahn said devalued Xerox under the now ended Xerox-Fujifilm merger deal. (Interesting side note: Xerox’s highest share price was $155, back in 1999.)

Icahn has stated that potential buyers for Xerox could include tech companies such as Apple and Microsoft. It’s hard to seriously envision either company wanting to become involved with printers and copiers.  Either company or some other Silicon Valley tech company might be interested in Xerox’s distinguished PARC research center famed for its many outstanding tech innovations, but that’s about it. As for other printer and copier companies, virtually all are diversifying from office printers and copiers into such areas as medical technology, security technology, and IT services.

On the private-equity side, one company rumored last year to be interested in Xerox is Apollo Global Management. One key reason why Apollo was said to be interested in Xerox is because Icahn-backed Xerox CEO John Visentin was previously CEO of Novitech Enterprises Solutions and chairman of Presidio, two companies that Apollo invested in.

Xerox’s recent announcement that it will become a wholly owned subsidiary under a new holding company also means that it’ll likely be easier to sell units, so that a buyer interested in one part isn’t forced to buy the whole company and units they’re not interested in. That might mean that private equity like Apollo might take on some parts, while HP takes on other(s), such as Xerox’s market-leading managed print services business.

Ultimately, we may eventually see a very different Xerox from the one we know today.

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