Starteepo urges Xerox to separate financial services

Starteepo, a Prague-based investor that has built a 7.34% stake in Xerox, asked the company to report the results of its financial services unit separately and to launch a formal strategic review of that business. The investor also pressed Xerox to cut leverage and tighten capital allocation, proposing a sale, a joint venture, a strategic capital partnership or alternative financing arrangements.

In a letter to Xerox’s board, Starteepo requested clearer disclosure for the unit that provides financing to customers who buy Xerox equipment and asked management to outline a strategy by the company’s third-quarter results. The firm urged the board to appoint advisers to conduct the review and to evaluate structural options that Starteepo contends could raise equity value.

Starteepo is led by Frantisek Bostl and first disclosed a meaningful Xerox position in May, increasing its holding in July. The investor estimated the finance business could be worth as much as $7.69 a share if its value were recognised. Under an “optimised” capital structure proposed by Starteepo, a third party would fund the finance portfolio while Xerox would retain servicing operations and customer relationships; the investor projects those changes could lift equity value to about $3.3 billion, roughly more than $18 a share.

Xerox shares rose as much as 6.9% to $3.55 in early New York trading before settling near $3.38. The stock had declined about 13% over the prior year and the company’s market capitalisation is roughly $418 million. Other investors have raised questions about Xerox’s balance sheet and bond pricing in recent months.

Starteepo asked the board to present a timetable and recommendations alongside the third-quarter disclosure. The investor has previously held positions in companies including Warner Bros. Discovery and Western Digital. Xerox faced an earlier activist campaign from Carl Icahn, who secured three board seats after pressing for strategic alternatives and later sold his remaining stake back to the company for $542 million in 2023.