November 22, 2019
Earlier this week, 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.
Earlier this month, Xerox confirmed its offer to acquire HP in a deal valued at about $33.5 billion. Xerox offered HP $22 per share in its takeover bid for the company. The bid consists of 77% cash and 23% stock, or $17 in cash and 0.137 Xerox for each HP share.
In a letter to HP’s board, John Visentin, Xerox’s vice chairman and CEO, said “we were very surprised” that HP’s board “summarily rejected our compelling proposal.”
“Moreover, our offer is neither ‘highly conditional’ nor ‘uncertain’ as you state,” he said. “There will be no financing condition to the completion of our acquisition of HP. While we are glad to see that HP’s board of directors acknowledges the substantial merits of a business combination between Xerox and HP, and are open to exploring the value opportunity for our respective shareholders, your response lacks a clear path forward.”
HP requested customary due diligence, which Xerox has accepted, but has refused to agree to corresponding due diligence for Xerox, Visentin said.
“Any friendly process for a combination of this type requires mutual diligence — your proposal for one-way diligence is an unnecessary delay tactic,” he said. “In light of favorable markets and terms, Xerox is determined to capture the compelling opportunity for our respective shareholders and strongly encourages HP’s board of directors not to sanction further delay in light of our extensive discussions to date.”
Xerox remains willing to devote the resources necessary to complete mutual due diligence during the next three weeks, and confirm the cost and revenue synergies that could be achieved through a combination, Visentin said.
Xerox’s board is “determined to expeditiously pursue our proposed acquisition of HP to completion — we see no cause for further delay,” he said.
Unless the two boards agree on “mutual confirmatory due diligence to support a friendly combination” by 5 p.m. EST, Nov. 25, Xerox will take its “compelling case to create superior value for our respective shareholders directly to your shareholders,” Visentin said.
“The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction,” he said. “We look forward to your prompt response.”
HP couldn’t be reached for comment on this latest development.
Earlier this week, Amy DeCarlo, GlobalData’s principal analyst of security and data-center services, said HP’s rejection of Xerox’s proposal is not unexpected, however, she noted HP’s board acknowledged “there are benefits to consolidation and it would entertain future offers.”
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