Xerox threatens HP with takeover if offer rebuffed.
Printer giant gives the tech company less than a week to decide on $33.5B offer
HP may have said no to Xerox’s $ 33.5 billion acquisition offer — but that doesn’t mean Xerox is taking no for an answer.
On Thursday, Xerox told HP that it will take its buyout offer directly to the company’s shareholders if the HP doesn’t reconsider the deal by Monday. In a letter to HP CEO Enrique Lores and Chairman Charles “Chip” Bergh, Xerox chief executive John Visentin said his company sees “no cause for further delay” in taking steps to complete a “friendly combination” of the two companies.
Visentin also said Xerox was prepared to wage a proxy battle to get a deal done.
“Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders,” Visentin wrote. “The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction.”
HP didn’t immediately return a request for comment Thursday.
On Sunday, HP told Xerox is was turning down the $33.5 billion, or $22-ashare offer on the grounds that it “significantly undervalues HP and is not in the best interests of HP shareholders.” However, HP also left the door open for possible negotiations, saying, “with substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”
In his letter to HP, Visentin said he was “very surprised” the company thought Xerox’s offer undervalued HP. Visentin noted that HP’s own financial adviser, Goldman Sachs, set at $14- a- share price target and a sell rating on HP’s stock when the company announced a re
structuring plan on Oct. 3.
CFRA analyst Angelo Zino, who covers HP, said he thinks activist investor Carl Icahn is playing a key role in Xerox’s efforts. Prior to HP’s decision to turn down Xerox’s offer, Icahn told the Wall Street Journal that he had obtained 4.24% of HP’s stock, and that an HP-Xerox merger would be “a no-brainer.” Icahn also owns 10.6% of Xerox’s outstanding shares.
“He has a stake in both companies and is looking for a combination any way he can get it,” Zino said. “Xerox’s persistent attempts could force HP’s hand. All in all, we do expect both sides to have deeper engagements about benefits that can be created from a combination.”