Activist investor Carl Icahn is pushing personal computers maker HP to hold merger discussions with Xerox. The veteran investor said that the company’s current restructuring plans amount “to little more than rearranging the deck chairs on the Titanic.”
A potential combination could yield over $2 billion in synergies, Icahn said. Data compiled by Bloomberg shows that the activist owns a nearly 11% stake in Xerox and 4.2% in HP.
“It is absurd for the HP board […] to claim to have had a sudden epiphany and now expect shareholders to trust them to execute a standalone restructuring plan.”
HP rejected Xerox’s cash-and-stock offer of $22 per share last month. It deemed the proposal too low. The unsolicited bid valued HP at around $33 billion. Xerox will take the merger case to HP investors.
In addition, Icahn expressed confusion over the board’s refusal to conduct mutual due diligence to explore a deal. The decision of HP’s board to block the talks is “irrational” and not in shareholders’ best interest.
“I can say without exaggeration that the combination of HP and Xerox is one of the most obvious no-brainers I have ever encountered in my career — […] the merits of the combination are so obvious to everybody involved,” the billionaire noted.
As a result, Icahn urged investors to let the board know that they need to take immediate action.
“I cannot believe that the recalcitrance of HP’s board is driven by any real confidence in its standalone restructuring plan, which the market, shareholders and analysts met with extreme indifference,” the investor highlighted.
In the past year, HP’s shares have seen a 18% decline. Based on the Tuesday close, company’s market value stood at about $29 billion.