Icahn Discloses Holding in HP, Urges Merger

According to The Wall Street Journal, activist investor Carl Icahn, who was largely responsible for the derailment of last year’s proposed Xerox-Fuji Xerox merger, and who owns a 10.6-percent stake in Xerox, has disclosed that he now owns a 4.2 percent in HP Inc., which is worth approximately $1.2 billion.

An HP spokesperson told Reuters that HP is aware of Icahn’s investment and is “committed to doing what is in the best interests of all HP shareholders.”

Earlier this month, Xerox offered to purchase HP in a cash-and-stock deal for approximately $33 billion.

Icahn told The Wall Street Journal that his team began looking at HP in late February and he purchased HP shares from late April to mid-August, although he did not have a deal with Xerox in mind when he started accumulating the shares.

According to Market Watch, Icahn said it’s in the best interests of both companies to merger, noting that Xerox says a merger could yield up to $2 billion in annual savings.

“I think a combination is a no-brainer,” Icahn said. “I believe very strongly in the synergies. 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.”

HP, which many have speculated would seek to buy Xerox and not the other way around, is said to have about four weeks to consider the offer.

In the past, Icahn has said that he would welcome the sale of Xerox at $40 per share, stating that Fujifilm’s offer for Xerox was too low. Xerox is currently trading at $37.60 per share.

Meanwhile, according to CRN, several HP partners are apparently against the merger. For instance, Harry Zarek, president and CEO of Compugen, said, “This proposed move by Xerox has only negative outcomes for HP’s channel partners.” Zarek explained that Xerox has traditionally been a direct-sales organization and that it’s still in the early stages of how learning how a channel approach works, while HP has a mature channels-based approach. “There is a big cultural mismatch around Xerox being able to understand how today’s IT channel model works,” Zarek said.

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