Published: Mon, November 18, 2019
Markets | By Otis Pena

HP rejects takeover offer from Xerox

HP rejects takeover offer from Xerox

Responding to Xerox's offer on Sunday, HP said in a statement that it would saddle the combined company with "outsized debt" and was not in the best interest of its shareholders.

HP's board of directors on Sunday acknowledged they'd unanimously rejected the "unsolicited" proposal from Xerox Holdings Corporation, claiming their provide of undervalued HP and was once no longer in the hobby of shareholders.

What makes this deal even more interesting is that HP is worth $29 billion and it is 3 times the size of Xerox based on market cap.

Xerox had offered HP shareholders US$22 per share that included US$17 in cash and 0.137 Xerox shares for each HP share, according to the November 5 letter.

One of the merger proponents, activist investor Carl Icahn, who has a 10.6% stake in Xerox, recently acquired a $1.2 billion stake in HP. As per the report, he was pushing for the merger of the two companies because he believed that the combined entity would be beneficial for shareholders of both companies.

Despite the rejection on the proposed takeover, HP said it remains "ready to engage" with Xerox in what it referred to as a "potential combination".

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The Lowdown: HP wasted little time acting on the acquisition that was formally proposed November 5.

Moreover, the HP board said that while it recognises the potential benefits of consolidation, and is open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox, it has "fundamental questions" that need to be addressed in regards to its due diligence of Xerox. They put the total value of the deal at US$33.5-billion.

HP Inc.'s board of administrators has rejected Xerox's blockbuster bid to take over the non-public laptop and printing large.

HP bought Autonomy for US$11.1 billion in 2011 as the centerpiece of its unsuccessful pivot to software. HP is three times Xerox in terms of market value and more than six times in terms of gross revenue.

Xerox's stock has rallied under Visentin, who took over past year as CEO.

Besides seizing on the uncertainty of the financing, HP directed a barb at Xerox, noting the decline of its revenue from $10.2 billion to $9.2 billion since June of previous year, which "raises significant questions for us regarding the trajectory of your business and future prospects".

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