HP Takes Aim At Icahn In Xerox Spat, Says Investor 'Not Aligned' With Other HP Shareholders

Icahn, a major shareholder in both companies, ‘would disproportionately benefit from an acquisition of HP by Xerox at a price that undervalues HP,’ the company says in a new response.


HP Inc. is bringing its first public criticism of activist investor Carl Icahn in the company's latest response to Xerox's hostile takeover attempt.

On Thursday, Xerox announced it is nominating 11 HP board members in a bid to shift control of the company's board of directors, which has repeatedly brushed off Xerox's acquisition efforts.

[Related: Carl Icahn's HP-Xerox Moves: 5 Big Things To Know]

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HP responded by calling the latest move a "self-serving tactic," and repeated its argument that the roughly $32 billion offer "significantly undervalues" HP, the largest printer vendor and second-largest PC maker worldwide.

"Xerox’s proposed transaction attempts to use HP’s financial capacities for the benefit of Xerox shareholders," HP said in the response.

In the statement, HP also took an approach that it had so far avoided, in mentioning Icahn by name. Icahn is a major shareholder in HP, having disclosed a 4.24 percent stake. Icahn also owns 10.6 percent of Xerox shares, and he was central to the installation of John Visentin, a longtime Icahn loyalist, as CEO of Xerox in 2018.

While Visentin has been the main public figure leading the charge for Xerox to acquire its printer rival HP, Icahn has remained largely behind the scenes. HP leadership is now getting more outspoken about Icahn, however.

"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," HP leadership said in its response Thursday. "Due to Mr. Icahn’s ownership position, he would disproportionately benefit from an acquisition of HP by Xerox at a price that undervalues HP."

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 in its statement.

Icahn declined to comment through a representative on Thursday. Xerox did not immediately respond to a request for comment.

In its statement, HP also defended the records of its current board members.

"HP’s Board includes world-class directors who bring relevant skills and proven experience in advancing HP’s strategy across personal systems, print and 3D, and driving sustainable, profitable growth and value creation," the company said.

Achievements cited by HP included "developing and implementing cost cutting plans to support both profitable growth and brand competitiveness in global markets as demonstrated by HP’s performance over the past three years, which includes $10.5 billion in revenue growth and $12.9 billion in cumulative cash flow from operations."

HP said its board will review Xerox's proposed director nominees, and will "respond in due course."

The company said it has not yet announced a date for its 2020 annual meeting, where the board of directors will be chosen.

Xerox has ratcheted up pressure on HP since first announcing its offer to buy the company in November, in what amounted to a $22-per-share offer for the much larger HP. The combined cash and stock deal would give HP $17 per share, plus .137 in Xerox stock for each share of HP.

Talks between the two companies broke down after HP rejected that deal, and Xerox threatened a proxy war. As the two sides have traded public letters, HP said it doubted Xerox’s ability to finance its offer. Xerox responded on Jan. 6 that it had secured financial backing from three banks—Citigroup Inc., Mizuho Financial Group and Bank Of America— to finance $24 billion of the $32 billion proposed deal.