Xerox attempts board takeover as battle for HP rages

The battle for control of HP has ratcheted up several notches, with Xerox buying a small stake in the company, then nominating 11 of its own people for the HP board.

HP has pushed back against the board move in the strongest terms, a company spokesperson saying, “We believe these nominations are a self-serving tactic by Xerox to advance its proposal, that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.” 

Driven by activist shareholder – corporate raider in old language – Carl Icahn, the hostile takeover bid is now in its eighth week. Icahn, who owns 11 per cent of Xerox and four per cent of HP, has had Xerox table a $33bn bid for HP; however, the HP board says its shareholders are better served by rebuffing Xerox.

HP has laid into Icahn, telling its investors and analysts that the 83-year-old billionaire is essentially seeking to enrich himself at the expense of HP shareholders. HP says it believes, “The Xerox proposal and nominations are being driven by Carl Icahn, and his large ownership position in Xerox means that his interests are not aligned with those of other HP shareholders. Due to Mr Icahn’s ownership position, he would disproportionately benefit from an acquisition of HP by Xerox at a price that undervalues HP.

“Mr Icahn has meaningful influence over Xerox and its Board of Directors given this ownership position; the role he played in the appointment of Xerox’s current CEO, who is a former Icahn consultant; and the ties Mr Icahn has to members of the Xerox Board, including Xerox’s Chairman, an Icahn employee.”

Icahn has a controversial history: he was one of the original kings of corporate raiders that emerged in the wake of deregulated financial markets in the 1980s. He came into the spotlight with his raid on aviation giant TWA, which netted him hundreds of millions of dollars but saw the company bankrupted. Since then he has engaged in titanic battles with some of the biggest corporates, including eBay and Apple – from which he made $2bn in little over two years – and he was the person who stopped Fujifilm buying Xerox before effectively sacking the board and putting his own team in.

HP is seven times the size of Xerox, with sales last year of US$58.8bn, while Xerox achieved sales of US$9.8bn. The HP Graphic Solutions business, which develops well-known print industry solutions including Indigo, PageWide, Latex, Scitex, and DesignJet, represents about eight per cent of the HP business.

The Xerox production print business, which includes Iridesse, iGen, Versant, and Nuvera, is about four per cent of the overall Xerox business.

The future shape of any combined business is unknown, although corporate raiders have a track record of selling off disparate parts of businesses they take over.