Activist investor presses Xerox to review financial services arm - Bloomberg

Xerox is confronting renewed activist pressure after investment manager Starteepo disclosed a 7.34% stake in the office equipment company and demanded a formal strategic review of its financial services arm. The Prague-based firm, which sent a letter to the board, also called for immediate balance sheet deleveraging, tighter capital discipline and fuller financial transparency, according to Bloomberg News.

Starteepo, led by investor Frantisek Bostl, argues that Xerox’s financing unit alone could be worth up to $7.69 per share—more than double the company’s entire market value. To unlock that value, the activist wants management to start disclosing the unit’s financials separately and lay out a clear operational strategy no later than the third-quarter earnings report.

Beyond improved reporting, the fund is urging Xerox to retain advisers to explore options for the financing arm, including potential joint ventures, strategic capital partnerships or a complete sale. Starteepo also suggests an optimized capital structure in which a third party supplies portfolio funding while Xerox maintains customer relationships, citing comparable arrangements at peers such as HP and General Electric.

The hedge fund, which first began building its position in May and expanded it in July, projects that these operational changes could lift Xerox’s equity value to $3.3 billion, or more than $18 per share. Bostl emphasized that a deleveraged balance sheet would put the printing pioneer in a stronger position to earn a premium valuation and take part in wider industry consolidation.

This latest effort echoes earlier activist campaigns at Xerox, most notably Carl Icahn’s successful push for board representation and a corporate split into two public entities beginning in 2015. Icahn ultimately exited his stake in 2023, when Xerox bought back his remaining holdings for $542 million.

With the stock down 13% over the past year and market capitalization reduced to roughly $418 million, Xerox shares gained 1.8% in premarket trading after the report. Investors are now watching to see whether management will take up the proposal as a catalyst for a turnaround.