Carl Icahn Buys $1.2B Stake in HP Inc. and Calls HP-Xerox Merger a 'No-Brainer'

Carl Icahn | Credit: Twitter.com

It seems that mainstream news reports about the status of Xerox Holdings' $33 billion, combined cash-and-stock offer to acquire HP Inc. that was announced last week are being published almost as fast as the output streaming off an iGen or HP Indigo digital press.

Conjecture has swirled that Xerox really does intend to acquire its more than three times larger rival (HP has a market value of about $29 billion) — all the way to arguments that the offer is really a negotiating ploy by Xerox to get HP Inc. to the bargaining table, whereby HP will be under pressure to end up actually acquiring Xerox.

The plot continued to thicken this week with a Wall Street Journal report that 83-year-old activist investor Carl Icahn, who already owns a 10.6% controlling stake in Xerox,  revealed that he has acquired a 4.24% stake in HP Inc. worth about $1.2 billion. He reportedly had been buying up HP stock between April and August, and claims that he didn't have an acquisition of HP Inc. in his sights at that time.

Even so, it's just one more indicator of the influence Icahn maintains in pressuring some kind of merger agreement to ultimately take place.

"I think a combination is a no-brainer," Icahn told the Journal. "I believe very strongly in the synergies," he said, noting that "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."

Icahn said he believes a combined company is in the best interests of both sets of shareholders, given the potential for cost savings — which Xerox claims would amount to about $2 billion annually, largely by the elimination of redundancies — and their combined effort to market a more balanced portfolio of offerings to their shrinking customer bases.

This certainly won't be the last revelation that will unfold in this continuing M&A saga. Win, lose, or draw, Icahn will undoubtedly walk away with a sizable return on his investments.