Icahn pushes for HP Xerox consolidation

Act on the opportunity NOW!

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Carl Icahn. Photo - greatperformersacademy.com
Carl Icahn. Photo - greatperformersacademy.com

In the first week of November 2019, Xerox boldly proposed to buy HP, a company that has three times the market capitalization of Xerox. At the time, HP was valued at US$ 27.27 billion while Xerox was at US$ 8.05 billion. The deal was approved by the common and largest shareholder in both of the companies, Carl Icahn.

However, in mid-November, the deal was rejected by HP’s board on the grounds that US$ 33.5 billion opening bid “significantly undervalues” the business.

In an open letter dated 4 December 2019 to HP, Carl Icahn explains the potential benefits of consolidation, “the only thing standing in the way of moving quickly toward a combination that could yield US$ 2+ billion of cost synergies is HP’s board and management’s unreasonable refusal to engage in a customary mutual due diligence process.”

Icahn owns 23,456,087 common shares of Xerox, 10.85% of the outstanding shares, and 62,902,970 common shares of HP, 4.24% of the outstanding shares making him the largest shareholders of each company.

The only reason that he sees for HP’s refusal to go through the deal is because it is “simply a delay tactic aimed at attempting to preserve the lucrative positions of the CEO and members of the board, which they fear might be affected if a combination does take place.” He “cannot believe that the recalcitrance of HP’s board is driven by any real confidence in its standalone restructuring plan, which the market, shareholders and analysts met with extreme indifference and which seems to amount to little more than rearranging the deck chairs on the Titanic.”

Wall Street is littered with the bones of companies, such as Eastman Kodak,” that did not act wisely when they were given a chance to merge. He reproaches the HP board and management team who, “have such a history of underperformance and missteps, to claim to have had a sudden epiphany and now expect shareholders to trust them to execute a standalone restructuring plan rather than to even explore an opportunity to enter into a combination that could bring about a much needed US$ 2+ billion of cost synergies and possibly save the company.”

Icahn, who has seen “many obvious no-brainers” in his time, emphasizes that “the combination of HP and Xerox is one of the most obvious no-brainers.” He implores the HP shareholders “to reach out to HP’s directors to let them know that immediate action is necessary to explore this opportunity NOW while there is still a willing counterparty on the other side.”

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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