Former HP chair: Spinoff not a defensive play

Fmr. HP chair: Perfect moment for split
Fmr. HP chair: Perfect moment for split   

Former Hewlett-Packard Chairman Ralph Whitworth struck back at speculation that the company's plan to split its business in half was a defensive move spurred out of weakness.

"It's totally out of offense, Whitworth said on CNBC's "Closing Bell" Monday, adding that the plan will generate shareholder value and spur innovation.

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Whitworth—whose hedge fund, Relational Investors, acquired a 1.49 percent stake in HP in 2011—said the plan has both financial and operational benefits, but it's mainly "just a much better way to present the assets to the market."

Ralph  Whitworth's hedge fund, Relational Investors, acquired a 1.49 percent stake in HP in 2011.
Jay Mallin | Bloomberg News | Getty Images
Ralph Whitworth's hedge fund, Relational Investors, acquired a 1.49 percent stake in HP in 2011.

"They're rationalizing their portfolio of assets and putting them into groups that meet different market demands," he said.

He said the plan addresses fears of cross-subsidies, which occur when a firm's cash-generating business feeds future growth.

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"You really want that business to stand on its own," he said.

The idea of a split has been around for a long time, but Whitworth said it makes sense now.

"We've been spending the last three years getting these platforms in place, getting them cleaned up," Whitworth said. "There's been a lot of focus on efficiency [and] innovation…. I'm really excited about it as a large investor."