Carl Icahn, Xerox’s largest single shareholder with approximately 11% of its shares, is being sued by another Xerox shareholder that claims Icahn bought $1.2 billion in HP stock with the knowledge that Xerox was considering purchasing HP’s stock at a premium, Bloomberg reported.
The suit was filed in New York state court in Manhattan last Friday by the Miami Firefighters Relief and Pension Fund. Named in the suit are Ichan, Icahn Capital LP and High River Limited Partnership.
According to Bloomberg, they are accused of breaching their fiduciary duties to Xerox by purchasing HP stock with knowledge that “Xerox was either considering making an offer to purchase HP, had already approached HP about a possible merger into or acquisition by Xerox, or of the obvious merits of Xerox’s potential acquisition of HP.”
Icahn announced in September that he had purchased the HP stock. Icahn Capital and High River own more than a combined 62.9 million shares of HP which, according to Bloomberg, makes him the fifth-largest HP shareholder.
Case-Building
In a recent letter to HP shareholders, Ichan outlined some of the advantages he feels would be gained by a combination with Xerox. In the letter, he highlighted, “I 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.”
Not long after, Xerox CEO John Visentin fired off a 33-page presentation in favor of a combination directly to HP’s shareholders, encouraging them to push HP’s board of directors back to the negotiating table.
In November, HP’s board repeatedly rejected Xerox’s offer of $33.5 billion in cash and stock, emphasizing its concern regarding Xerox’s ability to raise the cash portion of the deal. HP also has concerns about the impact of the outsized debt burden on the combined company’s stock.
