Activist investors have gone quiet during the pandemic

IF THE MERGER of Hewlett-Packard (HP) and Compaq Computer in 2002 was “a slow-motion collision of two garbage trucks”, Xerox’s $33bn unsolicited bid for HP this winter was more like two garbage trucks in a high-rev demolition derby. Both companies’ best days are long gone. Their original businesses, copying and printing, have been heading for the waste-paper bin. And HP was more than three times the size of Xerox, which therefore needed a huge pile of debt to finance the transaction. The hostile approach looked more like an act of desperation than of strategic thinking.

Egging them on from the sidelines was Carl Icahn, an 84-year-old activist investor who held stakes in both firms and initially reaped big rewards in the first quarter as their share prices rose. As a brilliant strategist, but with a tongue like a viper, he is an almost Dickensian caricature of the win-at-all-costs renegade. According to Mark Stevens, his biographer, he thinks some chief executives are “morons”, surviving because of a “reverse Darwinism”. He plunders corporate balance-sheets in order to return cash to shareholders, making sure he is the biggest beneficiary. He appears comfortable with his venomous reputation. “If you want a friend on Wall Street, get a dog” is one of his aphorisms.

On March 31st the unexpected happened. Xerox withdrew its...

via Business Feeds

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