Icahn would “disproportionately benefit” from a merger between the two companies, HP said.
Neilson Barnard/Getty Images for New York Times
Topline: In the latest development in the ongoing and increasingly tense merger battle between Xerox and HP, the latter is accusing activist investor, Carl Icahn, of pushing for a hostile takeover. In a public statement, HP says Icahn is trying to force a merger because he stands to profit from ownership stakes in both companies.
- Xerox officially launched its hostile takeover on Thursday by announcing that it plans to nominate 11 new directors to replace HP’s entire board of directors at an upcoming shareholder meeting, setting the stage for a tense proxy battle.
- HP fired back, calling Xerox’s nominations to its board a “self-serving tactic” and reiterating that “value creation for HP shareholders is not dependent on a Xerox combination.”
- In a comprehensive statement released later on Thursday, HP also took aim at activist investor Carl Icahn and blamed him for the hostile nature of the takeover: “We believe that Xerox’s proposal and nominations are being driven by Carl Icahn.”
- Icahn declined to give a statement when contacted by Forbes.
- Because of his large ownership position in Xerox, HP said, Icahn’s interests “are not aligned with those of other HP shareholders” and he would “disproportionately benefit” from a merger between the two companies.
- HP also emphasized Icahn’s “meaningful influence” over Xerox and its board of directors. HP points to his role in the appointment of current CEO John Visentin, a former Icahn consultant, as well as his ties to the Xerox board—and especially its chairman, Keith Cozza, who is CEO of Icahn Enterprises.
- In its statement, HP also reiterated its rejection of Xerox’s $33.5 billion takeover bid, saying that it “significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.”
Crucial quote: “Xerox’s proposed transaction attempts to use HP’s financial capacities for the benefit of Xerox shareholders,” HP said.
Big number: Carl Icahn, who has a net worth of $17.1 billion according to Forbes’ estimates, holds an 11% stake in Xerox and almost a 5% stake in HP. He’s been one of the deal’s biggest advocates, repeatedly urging HP shareholders who agree with the merger to push for immediate action.
Key background: Since it made an unsolicited $33.5 billion cash-and-stock offer last November, Xerox has been pursuing a takeover of HP, a company more than three times its size. The bid has been unanimously rejected several times by HP’s board of directors, who remain adamant that the proposal undervalues their company. Earlier this month, Xerox confirmed that it had successfully secured $24 billion in financing from big banks to pursue its takeover, but talks were again rebuffed. Now, by nominating a new slate of directors for HP’s board, Xerox has taken its acquisition efforts to the next level by going hostile. Xerox CEO John Visentin said earlier today that HP shareholders will be “better served” by the new group of independent directors, who “appreciate the value that can be created” from a merger. “HP shareholders have told us they believe our acquisition proposal will bring tremendous value,” Visentin said.