(Reuters) - Activist investor Carl Icahn has taken a stake in HP Inc <HPQ.N> and is pushing for the personal computer maker's merger with printer maker Xerox Corp <XRX.N>, arguing that a union could yield big profits for investors, according to the Wall Street Journal.
Icahn, who owns a 10.6% stake in Xerox, disclosed a stake of 62.9 million shares of HP valued at $1.19 billion (£929.98 million) as of Sept. 30, in an SEC filing on Thursday.
An HP spokesperson told Reuters the company is aware of Icahn's investment and is committed to doing what is in the best interests of all HP shareholders.
Xerox made a roughly $33 billion cash-and-stock offer for HP, a company more than three times Xerox's size, Reuters reported last week. HP confirmed the bid, but has not disclosed the offer price.
"I think a combination is a no-brainer," Icahn was quoted as saying by the Journal.
"I believe very strongly in the synergies," he said, adding that "there will probably be a choice between cash and stock and I would much rather have the stock, assuming there's a good management team."
Xerox believes it can achieve at least $2 billion in annual cost synergies by creating an office technology supplies giant, a source told Reuters last week.
The billionaire told the Journal that his team began looking at HP in late February and he bought the company's shares from late April to mid August, though he did not have a deal with Xerox in mind when he started accumulating the shares.
Icahn said he believes a combined company is in the best interests of both sets of shareholders given the potential for cost savings and to market a more balanced portfolio of printer offerings, the WSJ reported.
This is not the first deal that Icahn has tried to orchestrate by having a small company buy a bigger one.
In June, U.S. casino operator Eldorado Resorts Inc <ERI.O> agreed to acquire larger peer Caesars Entertainment Corp <CZR.O> for $17.3 billion, including debt. Icahn had earlier gained seats on the board of Caesars.
Icahn and Xerox did not immediately respond to Reuters requests for a comment late on Thursday.
(Reporting by Maria Ponnezhath and Anurag Maan; Additional reporting by Ambhini Aishwarya; Editing by Shailesh Kuber and Amy Caren Daniel)