HP questions Xerox and Icahn's motives

Jo Francis
Friday, January 24, 2020

HP has now issued a longer response after Xerox confirmed it planned to try and take over its board, the latest move in Xerox’s hostile bid to take control of HP.

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Initially, HP issued a short statement that said: “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.”

It subsequently put out a longer rebuttal calling into question the motives of Xerox’s majority shareholder, Carl Icahn.

“We believe that Xerox’s 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,” HP stated.

“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.”

HP said its own board was independent and “unwavering in its commitment” to shareholders and would continue to act in HP’s best interests.

The company reiterated its view that value creation for HP shareholders “is not dependent on a Xerox combination”.

“Xerox’s proposed transaction attempts to use HP’s financial capacities for the benefit of Xerox shareholders,” the statement said.

Xerox has made a $33bn (£25bn) offer for the much larger HP business in cash and shares. The company had not responded to HP’s most recent statement at the time of writing.

HP’s share price was up slightly at $22.10 yesterday, while Xerox shares had slipped slightly to $36.23.

The date for HP’s AGM meeting, where shareholders will have the opportunity to vote on Xerox's board nominations, has not yet been set.

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