Xerox Increases Hostile Takeover Offer For HP

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Show me the money! In effort to tempt HP shareholders, Xerox increases its hostile takeover offer from $33.5 billion to $34 billion

Xerox Holdings has increased its hostile takeover approach for HP Inc, in an effort to woe major shareholders in the PC maker.

Xerox has increased its offer price to $24.00 per share (from $22.00 per share), raising its original $33.5 billion takeover bid to $34 billion, in a move that is sure to infuriate HP’s board of directors.

Last month, HP’s board of directors had once again rejected an unsolicited takeover offer from Xerox, saying the potential deal “significantly undervalued” the PC maker.

HP’s Envy x2

Increased offer

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.

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.

Xerox said that its improved $24.00 per share offer, expected in early March, will be comprised of $18.40 in cash and 0.149 Xerox shares for each HP share. It said that figure represents a 41 percent premium to HP’s unaffected 30-day volume weighted average trading price of $17.00.

Xerox claimed that it had enhanced its takeover offer make its offer more “compelling” for HP shareholders.

“Xerox has met, in some cases multiple times, with many of HP’s largest stockholders,” Zerox alleged. “These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP. The tender offer announced today will enable these stockholders to accept Xerox’s compelling offer despite HP’s consistent refusal to pursue the opportunity.”

HP has been cutting costs of late as it operates in a tough PC market. Last October it said it would carry out a massive jobs cull in the lead up to Christmas period, by axing of 9,000 jobs.

Activist shareholder

Carl Icahn meanwhile 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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