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Double Whammy

02 May 2018 by lberuti

Since November last year, Mr Icahn started to make some noise again as an investor in XRX ( Xerox Corp ) equities. Most recently he has been opposing the terms of XRX’s takeover by Fujifilm announced in January, arguing that they were struck by the CEO of the company without the board’s authorisation merely to preserve his own job. In a surprise statement, XRX said that the CEO and 6 board members agreed to step down. It puts the deal at risk and comes a few days after a New-York judge halted the transaction a few days ago. The tie-up with Fuji has been the driver of XRX’s risk premium tightening from roughly 200bps at the beginning of the year to 100bps. It was no surprise that investors pushed it 30bps wider from the word “go”. That effect was compounded after the European close when an article mentioned that Apollo had approached XRX about a possible deal. Expect the CDS to be another 20bps wider tomorrow. It is trading at 160bps as I type…