December 9, 2019
Xerox also has filed an investor presentation that’s now available to all shareholders. The Xerox-HP merger first was proposed early last month.
HP’s board of directors unanimously rejected Xerox‘s takeover bid, citing the “highly conditional and uncertain nature” of the proposal, but hasn’t closed the door on a potential deal. In response, Visentin said, “we were very surprised” that HP’s board “summarily rejected our compelling proposal” and “moreover, our offer is neither ‘highly conditional’ nor ‘uncertain’ as you state.” He then threatened to take the proposal directly to HP’s shareholders.
Xerox’s John Visentin
HP no longer is commenting on Xerox’s proposed acquisition.
In the investor presentation, Visentin said there is a “clear path to realizing increased value from your investment in HP” with the proposed transaction with Xerox. The combined company “will be both more profitable and better positioned to provide customers with a stronger mix of products, services and support than either company can do on its own,” he said.
The pairing would provide up to $1.5 billion in potential revenue growth opportunities, according to Xerox’s presentation. The company said it has a strong direct sales force, both selling to enterprises and SMB, while HP’s primary route to market is through its indirect channel.
The pairing would provide more competitive pricing for strategic target areas, and expanded go-to-market through resellers and indirect channels, according to Xerox.
Xerox is asking for three weeks of mutual due diligence.
“The value of the transaction goes beyond economics,” Visentin said. “In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way. The increased cash flow generated by this deal will allow for rapid deleveraging, greater capital returns to shareholders and enhanced investment in innovation that can put these storied brands at the forefront for decades to come. We strongly encourage you to urge HP’s board of directors to pursue this transaction on a friendly basis, starting with the provision of mutual due diligence.”
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