Xerox with direct offer to HP Inc. shareholders

Xerox with direct offer to HP Inc. shareholders

After unsuccessful attempts to find a common bond with the management of HP Inc., Xerox executives decided to contact the company’s shareholders directly with a proposal to repurchase their shares under pre-announced conditions.

The cash value of the deal is estimated at $ 34 billion, but part of the amount will be paid out of Xerox’s own shares. Bloomberg recalls that Xerox made its first non-public offer for the merger in May last year, but HP pointed out a number of factors that would prevent the deal.

First, HP Inc. has had no particularly successful experience in acquiring Samsung’s print business. Second, the company faces restrictions on doing business in China – one of the largest markets.

Finally, HP has a confidential agreement with Canon that can prevent the merger with Xerox. At the same time, low bid prices have repeatedly been cited as a major obstacle to the agreement.

Yesterday, Xerox addressed the shareholders of HP Inc. with a share repurchase offer, is valid until April 21, with renewal rights. The company is ready to offer $ 18.4 plus 0.149 own shares for each HP Inc. stock.

Xerox will require about $ 27 billion for this job. The company has about a tenth of that amount, but plans to raise another $ 24 billion through a consortium of investment banks.

Possible agreement with HP Inc. will allow the merged company to reduce costs by $ 2 billion and increase revenues by $ 1 billion annually.
HP Inc. Board of Directors gives itself ten business days to consider the proposal, after which it will make its recommendations to shareholders. Earlier, the company’s management announced that it plans to spend $ 16 billion over the next two years to buy back the shares.

Xerox Offer Promises to HP Inc. Shareholders benefits significantly, while retaining control of some of the assets of the merged company.
Xerox’s desperate fight to reunite with HP Inc. dictates the lack of prospects for organic business growth, versus the rejection of many paper clients, market observers note.

Xerox with direct offer to HP Inc. shareholders