Inside the bitter battle Carl Icahn-backed Xerox is waging to take over HP and its printer business, potentially sparking a fight worth at least $35B
The HP 63 Tri-color ink cartridge retails for $28.99 at Staples. Stuffed with foam sponges drenched in a fraction of an ounce of cyan … Tweets: @bw and @josheidelson Tweets: @bw : HP and Xerox are in a $35 billion war over $35 ink cartridges https://www.bloomberg.com/... Josh Eidelson / @josheidelson : “For decades, HP & Xerox ranked among the most powerful forces of invention in Silicon Valley. Now they're arguing over who has the superior vision 2 acquire competitors,jettison workers,&jealously guard the tech specs of their aging intellectual property” https://www.bloomberg.com/...
Context & Ripple Effects
Xerox's pursuit of HP began when sources reported it was weighing a cash-and-stock offer for a company more than three times its size; HP confirmed the proposal, then its board unanimously rejected the ~$33B bid [[a:947999]]. This Bloomberg feature goes inside the resulting hostile campaign — pegged at about $35 billion — and locates its real prize in consumables: the $28.99 tri-color cartridge and the guarded specs behind it.
The backstory frames why this fight looks like consolidation of the past rather than a bet on the future: Carl Icahn's activism had already pushed Xerox to abandon its Fujifilm merger, triggering a $1B+ lawsuit, while HP had spent $1.05B buying Samsung's printer business and patents. Two former Silicon Valley invention powerhouses are now maneuvering over who controls aging printing IP and its cash flows.
First-order effects
- HP's board and shareholders face a simultaneous tender offer and proxy fight from an acquirer a fraction of its size, with Carl Icahn's backing substituting for Xerox's balance-sheet disadvantage.
- Both companies' printing operations absorb the cost of the campaign itself — legal, financing, and management distraction — while the contested asset, the cartridge franchise, keeps selling.
Second-order effects
- The battle confirms where the value sits in mature printing: razor-and-blade consumables economics, which is why HP paid $1.05B for Samsung's printer patents and why jealously guarding tech specs has become a takeover battleground.
- Fujifilm sets the litigation template — Icahn's earlier intervention killed that merger and drew a $1B+ suit — so any forced HP-Xerox combination risks claims from parties whose existing arrangements get unwound.
Third-order effects
- If activist-driven combinations keep prevailing, legacy print hardware consolidates into fewer, financially engineered owners competing on consumables pricing and patent control rather than new-product R&D.
- Xerox's eventual decision to end the tender offer and proxy fight once the pandemic hit [[a:952158]] shows these campaigns are hostage to financing conditions — structural consolidation of declining hardware franchises advances only when credit and markets allow.
The trend: Activist-backed financial engineering, not product invention, is driving consolidation among legacy Silicon Valley hardware firms defending consumables cash flows.