Xerox has begun its hostile bid for PC giant HP, after it made good its threat to approach HP shareholders directly with its leveraged buyout offer.
It created a 33 page presentation entitled “Xerox and HP – A Value-Creating Combination” that was filed with the US Securities and Exchange Commission (SEC) on Monday
Xerox had set a deadline of 25 November 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.
And it is reported that Xerox’s CEO John Visentin has begun meetings with HP shareholders in an effort to increase pressure on HP’s board of directors.
The Xerox buyout presentation is said to detail how post-merger job cuts will result in cost savings of $2bn, and has touted immediate cash returns to HP shareholders.
The cost savings will apparently be achieved via a combination of the two various IT departments, as well as the consolidation of 8,000 suppliers to just 3,000. Other cost saving measures includes better inventory management and the selling off of real estate in 555 locations.
Other cost savings will be achieved via the removal of some role duplication.
In other words redundancies, and potentially lots of them.
It should be noted that HP had already 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.
Xerox has apparently stated that it has had informal approaches from lenders to finance the takeover. Remember, Xerox only has a market capitalisation of $8.2 billion, compared to HP’s $30.4 billion.
“This is a compelling proposal that immediately increases the value of your investment in HP and achieves long overdue industry consolidation that spurs efficiencies of scale and growth,” Xerox’s proposal concluded.
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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