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HP Incoming CEO, Enrique Lores

HP Rejects Xerox’s Take Over Bid

Computer and printer giants, HP on Sunday emphasised its rejection of Xerox’s $33 billion attempted takeover bid, saying the sum “significantly undervalues” the company.

 

 

“We reiterate that we reject Xerox’s proposal as it significantly undervalues HP,” the HP board of directors aid, “There continues to be uncertainty regarding Xerox’s ability to raise the cash portion of the proposed consideration,” rebutting its hostile approach.

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“We are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” wrote Lores and Bergh. “However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox.”

 

Xerox says it is “very surprised” by HP’s refusal of the cash-plus-stock offer. The offer values HP at $33.5 billion, or $22 per share — $17 in cash and 0.137 in Xerox (XRX) shares for each HP share. This is more than HP’s market cap of nearly $30 billion. Making the company more than three times the size of Xerox.

 

The offer represents a 29 percent premium to HP’s recent average trading price, Xerox chairman and chief executive, John Visentin said.

 

A takeover would tie the two companies with similar histories.

 

Xerox, founded in 1906 has become a household name with its copy machine. HP, which dates back to 1939, began by making audio equipment.

No-Brainer

Activist investor Carl Icahn told The Wall Street Journal that the tie-up was a “no-brainer”. He said it would increase returns for shareholders of both companies.

 

If unable to make a deal, Xerox will “take its compelling case to create superior value for our respective shareholders directly to your shareholders.

 

HP announced last month that it would cut between 7,000 and 9,000 jobs by 2022. Enrique Lores, HP’s new CEO, pronounced the move a “bold and decisive action” to help the company.

 

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Kolawole Awolope

Passionate about talking, passionate about talking tech.

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