Billionaire investor Carl Icahn pushes for Xerox-HP merger

Icahn, who actively opposed Michael Dell's 'privatisation' of Dell, owns 4.24 per cent stake in HP and more than ten per cent of Xerox

Billionaire activist investor Carl Icahn, who holds stakes in both Xerox and HP Inc, is pushing for the proposed merger between the two companies. Icahn believes merging HP with Xerox could yield better profits for investors.

"I think a combination is a no-brainer," Icahn told the Wall Street Journal in an interview, adding that he strongly believes "in the synergies" the two companies would enjoy, if they merged.

"There will probably be a choice between cash and stock and I would much rather have the stock, assuming there's a good management team," he stated.

Icahn owns a 10.6 per cent stake in Xerox and a 4.24 per cent stake in HP, according to the WSJ, and his stake in HP could increase pressure on the company to accept the offer from Xerox.

In a statement to Reuters, a HP spokesperson said that the company is committed to doing what is in the best interests of all HP shareholders.

Last week, Xerox made an offer to buy HP for $33 billion, more than three times the market value of the printer maker. HP acknowledged that it had received an acquisition offer from Xerox, but didn't disclose the offer price.

Xerox currently trades at a market value of about $8 billion, while HP is valued at around $27 billion.

HP is currently grappling with its struggling printer business, which was augmented in 2016 with the acquisition of Samsung's printer unit. Last month, it also announced a plan to cut up to 9,000 jobs by the end of 2022.

Xerox believes it can achieve up to $2 billion in annual cost savings after acquiring HP. While it hasn't detailed exactly where those cuts would fall, those savings would almost certainly come from a combination of staff cuts and squeezing the supply chain.

The printer and copier maker is believed to have received a funding assurance from a leading bank, according to the WSJ.

In addition, the company said last week that it planned to sell its 25 per cent stake in Fuji Xerox, the joint venture between Xerox and Japan's Fujifilm, for $2.3 billion.

After the deal is completed, Fujifilm will own Fuji Xerox outright.