HP Board Once Again Rejects Xerox’s Advances

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We are still not interested. HP’s board of directors once again rejects an unsolicited takeover approach from Xerox, saying it undervalues the PC maker

HP’s board of directors have once again rejected an unsolicited takeover offer from Xerox Holdings, saying the potential deal “significantly undervalues” the PC maker.

In a letter sent to Xerox’s vice chairman and CEO John Visentin (and seen by Silicon UK), HP’s CEO Enrique Lores once again firmly closed the door on the unsolicited offer fro Xerox.

Before Christmas Xerox had begun its hostile bid for HP, after it made good its threat to approach HP shareholders directly with its leveraged buyout offer.

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Hostile approach

Xerox had initially set a deadline of 25 November 2019 for HP’s board of directors to respond to Xerox’s $33.5bn buyout offer for the PC maker.

HP’s board refused to engage with Xerox and failed to open its books so Xerox could conduct due diligence.

It comes after after activist investor Carl Icahn acquired a $1.2 billion stake in HP and pushed for the proposed union of Xerox and HP, arguing that a combination of the printer makers could yield big profits for investors.

Icahn is said to own 10.85 percent of Xerox and 4.24 percent of HP.

But HP’s board continues to frustrate his approaches.

“We reiterate that the HP Board of Directors’ focus is on driving sustainable long-term value for HP shareholders,” HP wrote to Xerox’s Visentin. “Your letter dated January 6, 2020 regarding financing does not address the key issue – that Xerox’s proposal significantly undervalues HP – and is not a basis for discussion.”

Xerox has revealed this week that it had secured $24 billion of financing for a potential acquisition of HP. But securing this financing cut little ice with HP.

HP’s board feels that its restructuring will result in creating more value for HP shareholders.

The PC maker had announced it would carry out a massive jobs cull in the lead up to Christmas period, when it announced it would axe 9,000 jobs back in October.

Activist shareholder

Carl Icahn has a fearsome reputation as an activist shareholder who invests in companies and demands a shakeup in order to maximum shareholder (and his) returns.

Icahn for example made life very difficult for Michael Dell in 2012 and 2013, when he sought to derail his attempts to take Dell back into private ownership for example.

HP it should be remembered was formed in 2015, by the split of Hewlett-Packard into two separate companies.

HPE retained the core enterprise business, such as servers, storage and networking, while HP Inc took on the PC, printer and hardware unit.

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Author: Tom Jowitt
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