HP digs in against Xerox’s latest takeover bid.
Statement says proposal undervalues the company
In the ongoing drama between the two companies, HP has rejected Xerox’s latest terms on the grounds that the offer still undervalues the Silicon Valley PC and printing company.
HP said as much in a short, and terse letter sent to Xerox Chief Executive John Visentin late Wednesday night. In the letter, HP Chief Executive Enrique Lores and Chairman Chip Bergh showed no signs of willingness to negotiate with Xerox under that company’s current acquisition terms.
“We reiterate that the HP Board of Directors’ focus is on driving sustainable long- term value for HP shareholders,” wrote Lores and Bergh. “Your letter dated January 6, 2020 regarding financing does not address the key issue — that Xerox’s proposal significantly undervalues HP — and is not a basis for discussion. The HP Board of Directors remains committed to advancing the best interests of all HP shareholders and to pursuing the most value-creating opportunities.”
On Monday, Xerox sent a letter to HP saying it has lined up $24 billion in funding from Bank of America,
Citgroup and Mizuho Securities to support its unsolicited buyout offer, which values HP at $33 billion.
Xerox’s valuation of HP has been a major sticking point between the two companies ever since Xerox made its first offer for HP in early November. As of Thursday morning, HP had a stock market capitalization of $30 billion, while Xerox’s market cap was $7.8 billion.
Xerox has said it intends to take its offer directly to
HP’s shareholders, which could result in a proxy fight at HP’s annual shareholders’ meeting.
The situation is also colored by the involvement of activist investor Carl Icahn, who owns approximately 10.6% of Xerox’s stock, along with a 4.24% stake in HP. In November,
Icahn called a merger between Xerox and HP “a nobrainer.”
HP said it has no futher comment on the matter at the present time. Xerox didn’t immediately return a request for comment.