Carl Icahn, the noted investor-activist, has previously stopped the planned merger of Fujifilm and Xerox in 2018 and taken control of the board. He is now backing a merger with Hewlett Packard (HP), stating that a merger could yield considerable investor profits. Icahn has a stake of 10.6% in Xerox along with a 4.24% stake in HP. He has reportedly stated that a merger will naturally help both companies in an environment where Xerox has already made a per share offer of $22 for Hewlett Packard (HP).
This offer values HP at $33 billion and the company has confirmed the receipt of this bid. This offer contains cash of $17 billion and 0.137 Xerox shares per HP share. Xerox has a market valuation of $8 billion at present while HP is valued at approximately $27 billion. HP is known for its prowess when it comes to printers while Xerox has its strength in copiers.
Xerox does not possess a major market presence in some of the print industry’s fastest growth segments including digital label production, signage and packaging. Xeikon, HP and Konica Minolta are the market leaders for short-run label printing technologies and also digital printing. Xerox does not have offerings in this category except for iGens which can create folding cartons. HP also has its strength in digital production colour printing.
Xerox, on the other hand, will come handy for HP in its key domain which is copier-based production printing and office printing. The copier segment is led by companies like Konica Minolta, Ricoh, Canon and Xerox. HP and Xerox are both organizations based in the United States of America and the latter already has several executives from HP in the management team. With this merger, Xerox aims at creating synergies worth a minimum of $2 billion in annual costs. The HP-Xerox merger may throw up interesting possibilities for the global printing and office supplies market going forward.