HP rejects Xerox’s offer, calls bid too low
OFFER ‘MEANINGFULLY UNDERVALUES HP AND DISPROPORTIONATELY BENEFITS XEROX SHAREHOLDERS’, THE COMPANY SAID
LONDON: HP Inc. said it has rejected an unsolicited takeover offer from Xerox Holdings Corp. and has asked shareholders not to tender their shares.
The offer “meaningfully undervalues HP and disproportionately benefits Xerox shareholders,” the Palo Alto, California-based company said in a statement on Thursday. Xerox’s “urgency” in launching the offer shows its “desperation to acquire HP to address its continued business decline.”
Xerox on Monday pitched HP investors on a cash-and-stock offer valued at about $24 a share at the time. For each HP share, a holder would receive $18.40 in cash and 0.149 Xerox shares. The offer is set to expire April 21, Norstock walk, Connecticut-based Xerox said Monday in a statement. The offer valued HP at approximately $34 billion as of Wednesday.
HP shares were down about 1% at 9.52am in New York on Thursday to $21.37. Xerox fell 4.7%.
Spokespeople for Xerox didn’t immediately respond to calls and emails before regular business hours.
Xerox, which is much smaller than HP with a market value of about $7 billion, had already raised its bid from a cash-and
offer of about $22 per share in November. The deal is fueled with financing from from Citigroup Inc., Mizuho Financial Group Inc., Bank of America Corp., Mitsubishi UFJ Financial Group Inc., PNC Bank, Credit Agricole, Truist Financial Corp. and Suntrust Robinson Humphrey Inc. for the cash portion.
HP, which has a large printing business, has said in the past that it has many routes to create value that aren’t dependent on a combination with Xerox.
Chief executive officer (CEO) Enrique Lores is still new to HP’S top job, and has sought to make his mark on a company he’s worked at for more than three decades.
Lores wants to make printing services, 3-D printing and highend computers a larger part of HP’S business, and would oversee as much as a 16% reduction in the company’s workforce in a bid to cut costs. The company has been frugal since splitting with server maker Hewlett Packard Enterprise Co. in 2015, avoiding big mergers and acquisitions and returning capital to shareholders.
Xerox CEO John Visentin has criticised this plan as a piecemeal approach that won’t be as beneficial to HP as a combination.
Xerox already had started a proxy fight, nominating 11 candidates for HP’S board to help close the deal.
The two hardware giants have withered in a world increasingly driven by software, with less demand for printed documents. Xerox has argued the tie-up would revive both companies and unlock about $2 billion in synergies.