HP rejects Xerox proposal, says it is open to discussing transaction

Daniel Fowler
November 18, 2019

"(The board) has unanimously concluded that it (offer) significantly undervalues HP and is not in the best interests of HP shareholders", the company said.

HP Inc.'s board unanimously rejected Xerox Holdings Corp.'s unsolicited takeover offer, saying the $22-a-share offer is too low.

That stated, Ichahn stated that "a mixture is a no brainer", nevertheless he didn't particularly cite Xerox's proposal to purchase HP as the one doable deal that might make sense between the 2 corporations. As part of the deal, the board was considering a cash-and-stock offer above to HP's market value of $27 billion.

Activist investor Carl Icahn, who took over Xerox's board previous year together with fellow billionaire businessman Darwin Deason, said in an interview with the Wall Street Journal last week that he was not set on a particular structure for a deal with HP, as long as a combination is achieved. If the deal had been completed, HP shareholders would own approximately 48 per cent of the combined company.

A deal, to which HP left the door slightly open despite the offer expiring November 13, would have combined two struggling technology giants.

HP on Sunday published Xerox chief executive John Visentin's November 5 offer letter to HP, in which he stated that his company was "prepared to devote all necessary resources to finalize our due diligence on an accelerated basis".

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The move puts pressure on Xerox to open its books to HP.

Despite Xerox's point that first movers in a consolidating industry have advantages, the deal would hardly be the first in computing, as tech powerhouse Dell Technologies Inc.in particular has rolled up a number of acquisitions in computing, storage, networking and software for many years now. HP is three times Xerox in terms of market value and more than six times in terms of gross revenue.

"We have great confidence in our strategy and our ability to execute to continue driving sustainable long-term value at HP".

The board of directors pointed out some of the specific concerns it had with Xerox, including the company's declining revenue from $10.2 billion to $9.2 billion since June 2018, which it said "raises significant questions" for HP regarding the trajectory of the company's business and prospects.

And then the kicker: "We remain ready to engage with you to better understand your business and any value to be created from a combination".

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