Icahn confirms HP stake and pushes Xerox tie-up

Xerox's bid for HP was confirmed last week

Activist investor Carl Icahn has confirmed speculation that he holds a stake in HP, claiming that a merger with Xerox is the best way forward for both vendors.

In an interview The Wall Street Journal, Icahn revealed for the first time that he holds 4.24 per cent worth of HP stock, below the five per cent that would have required him to disclose his position, alongside a previously disclosed 10.6 per cent stake in Xerox.

Icahn believes that it is in the best interests of both companies to join forces, the WSJ said - but the investor said he is open to how a potential deal would be structured.

The current proposal from Xerox is that it would acquire HP, despite the fact HP's market cap is over three times larger than Xerox's own.

"I think a combination is a no-brainer," Icahn said. "I believe very strongly in synergies.

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

Icahn said that he started buying HP stock at the start of this year, after its share price plummeting as a result of disappointing results.

The potential cost savings of the merger are mooted at around $2bn.

Icahn was a vocal figure when Xerox's future was being decided last year and played a key role in scuppering the vendor's proposed merger with Fuji Xerox - a joint venture with Fujifilm. Xerox announced the sale of its share of the venture last week.

The investor told the WSJ that it was the Xerox CEO who suggested the possibility of a tie-up with HP, as far back as last November.