While Dec. 25 was an off day for the business world, a report in Barron’s indicates that it actually represented the start of a one-month window in which HP shareholders can make board nominations in advance of the company’s next annual meeting. That could provide a back-door opportunity for supporters of Xerox’s $33.5 billion cash-and-stock acquisition offer to populate HP’s board with pro-deal members.
All eyes are on Carl Icahn, who holds a significant stake in both HP and Xerox, as a likely person to nominate a full slate of HP directors who could push for the company to take a deeper look into Xerox’s acquisition offer of $22 per share.
The financial magazine cited a research note by Evercore analyst Amit Daryanani that indicated there is a “high probability” that either Xerox or Icahn will nominate a slate that would presumably push HP to reconsider the offer. In November and December, HP repeatedly struck down the proposal, fearing the risk of an onerous debt load that Xerox would need to take on in order to finance the deal.
Back in September, Icahn revealed he had purchased HP stock. Icahn Capital and High River Limited Partnership own more than a combined 62.9 million shares of HP which makes him the fifth-largest HP shareholder, according to Bloomberg.
Icahn has been instrumental in pushing the pro-acquisition faction. Last month, he wrote a letter to HP shareholders, citing the advantages that would be gained in a Xerox marriage. Often cited by proponents is the belief that a combined company could yield more than $2 billion in cost reductions.
Xerox CEO John Visentin has been aggressive in his quest to woo HP’s shareholders. After the Icahn letter, Visentin delivered a 33-page presentation to HP’s shareholders, providing more granular details that speak to the myriad of benefits gained via a union in the hopes they would pressure HP’s board back to the negotiating table.
All along, HP has remained steadfast, acknowledging some merits that would make such a proposal intriguing, but reiterating the negative impact an outsized debt burden would have on the combined company’s stock.