Xerox has made a new offer of about $35bn, including debt, to buy personal computer maker HP, as it seeks to win over the support of its rival’s shareholders in a move that could escalate hostilities between the two companies.
The latest sweetened offer of $24 per share — $18.40 in cash and 0.149 Xerox shares for each HP — represents a 41 per cent premium to HP’s unaffected 30-day stock price.
The Connecticut-based company will take its offer directly to shareholders after HP’s board twice rejected a previous $22-a-share bid, saying it undervalued the company. Xerox will start its public takeover bid in March by offering to buy shares directly from investors.
Shares in HP were up 2.7 per cent to $22.32 in early trading while Xerox shares advanced 1.1 per cent to $37.61.
Xerox said it had met a number of HP investors as it has been actively trying to convince them of the merits of a combination, but did not name the shareholders to which it had spoken.
“The tender offer announced today will enable these stockholders to accept Xerox’s compelling offer despite HP’s consistent refusal to pursue the opportunity,” Xerox said in a statement on Monday.
Activist investor Carl Icahn, who owns stakes in both companies and ranks as one of HP’s largest shareholders, has lobbied in favour of a deal.
HP has raised concerns about how its smaller rival Xerox will fund the deal, as well as questioning the business rationale.
Xerox’s market value is less than a third of HP’s, but Xerox claims that the combination could potentially unlock as much as $2bn in annual cost savings.
HP is particularly concerned about the decline in Xerox revenues and believes that a decision last year by Xerox to end its joint venture with Fujifilm left a sizeable strategic hole in Xerox’s portfolio.
Xerox raised $2.3bn from the Fujifilm sale that it can use in its pursuit of HP as well as $24bn in financing for the deal from Citigroup, Mizuho Financial Group and Bank of America.
In recent weeks Xerox has acquired a small stake in HP and has subsequently tried to replace its entire board — a common tactic in the arsenal of activist investors but an unusually aggressive move for a company trying to accomplish a merger.
HP labelled the nominations “a self-serving tactic” by Xerox in its hopes to expedite a deal.
The Xerox nominees include Betsy Atkins, the chief executive of venture capital firm Baja Corporation; Kim Fennebresque, who was previously a top banker at Lazard and UBS; Matthew Hart, an American Airlines board member; Jacob Katz, the former chairman of tax advisory group Grant Thornton; and Fred Hochberg, who served as the president of the US Export-Import Bank during the Obama administration.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50LzA3ZmRmNGY4LTRjMGMtMTFlYS05NWEwLTQzZDE4ZWM3MTVmNdIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50LzA3ZmRmNGY4LTRjMGMtMTFlYS05NWEwLTQzZDE4ZWM3MTVmNQ?oc=5
2020-02-10 15:18:00Z
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