A bitter fight is looking increasingly likely, as HP board refuses to open books in response to Xerox demand, after it rejected $33.5bn offer
HP Inc’s board of directors have failed to respond to Xerox’s deadline of 25 November to open its books so it can conduct due diligence.
Xerox had set the deadline after it had tabled a $33.5bn buyout offer for the PC maker. That move came 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.
When HP’s board reject this takeover offer, Xerox gave HP until 25 November to open its books for a “friendly” discussion – warning that failure to do so would result in it approaching HP’s shareholders directly (i.e. a hostile takeover).
With no response from HP, Xerox confirmed it is planning to take its $33.5 billion buyout bid directly to HP shareholders.
“Your refusal to engage in mutual due diligence with Xerox defies logic,” Xerox CEO John Visentin wrote in a letter.
“We have put forth a compelling proposal – one that would allow HP shareholders to both realize immediate cash value and enjoy equal participation in the substantial upside expected to result from a combination,” he wrote. “Our offer is neither ‘highly conditional’ nor ‘uncertain’ as you claim.”
“We have already received inquiries from several HP shareholders and are encouraged by their interest in our offer,” wrote Xerox’s boss. “Nevertheless, rather than engage with us in three weeks of customary mutual due diligence, HP continues to obfuscate and make misleading statements.”
HP did not immediately respond to a request for comment, but it has reportedly accused Xerox of using aggressive words and actions to force a potential combination on opportunistic terms and without providing adequate information.
“While you may not appreciate our ‘aggressive’ tactics, we will not apologise for them,” wrote Visentin. “The most efficient way to prove out the scope of this opportunity with certainty is through mutual due diligence, which you continue to refuse, and we are obligated to require.”
“We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity,” he concluded.
Last month HP had revealed it would carry out a massive jobs cull in the lead up to Christmas period, when it announced it would axe 9,000 jobs.
Some observers will suspect the influence of Carl Icahn behind the scenes, considering Xerox’s aggressive move for a company three times its size.
It should be noted that Icahn owns a 10.6 percent stake in Xerox, and now also owns a 4.24 percent stake in HP.
HP Inc 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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