21 November 2019


HP’s board has “unanimously rejected” Xerox’s takeover offer, stating that it undervalues HP and is not in the best interests of the company’s shareholders.

Xerox had proposed a $22-a-share (Ł16.97) takeover deal, of which $17 would be in cash, for the much larger HP business earlier this month. The total deal value was approximately $33.5bn and HP shareholders would own 48% of the combined entity.

Yesterday (17 November), HP’s board sent a letter to Xerox CEO John Visentin rejecting the “unsolicited proposal”, which was described as “highly conditional and uncertain” in nature “including the potential impact of outsized debt levels on the combined company’s stock”.

However, the letter did not rule out the possibility of a revised deal, but said that HP had fundamental questions that would require detailed due diligence.

It stated: “We recognise the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox.

“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. We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects.

“In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”

The letter concluded: “We remain ready to engage with you to better understand your business and any value to be created from a combination.”