HP confirms Xerox takeover offer

Citigroup Inc has agreed to provide Xerox financing

HP Inc confirmed that Xerox Holdings Corp has made a takeover offer, a potential deal between two iconic names in technology that would reshape the printing industry.

“We have had conversations with Xerox Holdings Corporation from time to time about a potential business combination,” the Palo Alto, California-based company said Wednesday in a statement. “We received a proposal transmitted yesterday. We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye toward what is in the best interest of all our shareholders.”

Citigroup Inc has agreed to provide Xerox financing to swallow HP, a person familiar with the matter said. The company would likely need to take on at least $20 billion of debt to close the deal, which was reported earlier by the Wall Street Journal. HP’s market capitalisation was about $27.3 billion at the close of trading on Tuesday, while Xerox’s was $8 billion, before news broke of the potential deal. Xerox had extended an offer at $22 a share, the Financial Times reported, a premium of about 20 per cent to HP’s close Tuesday, before news of a potential takeover emerged.

HP hasn’t decided whether the Xerox offer is the right deal, according to a person familiar with HP’s thinking. The PC maker doesn’t agree with Xerox on the potential synergies and has concerns about the debt needed for a deal. Even if HP decides a combination is worthwhile, it isn’t convinced Xerox has the relevant experience for a complex merger and doesn’t think Xerox should be the buyer.

HP, one of the world’s largest printer makers, and Xerox, one of the biggest sellers of photocopiers, are struggling as waning interest in office and consumer printing has blunted both companies’ most profitable businesses.