HP turns down Xerox acquisition proposal

Nov 17, 2019

HP announced Sunday that its board of directors has unanimously rejected an unsolicited takeover proposal from Xerox. But it didn't rule out the two companies still talking about possibilities in the future.

A letter from HP says that the Xerox offer significantly undervalues HP and is not in the best interests of its shareholders.

Xerox recently made a $22 per share bid for HP that values the company at $33 billion. HP is more than three times Xerox’s size.

Bloomberg News previously reported that Citigroup has agreed to provide Xerox financing for a potential takeover, and Bloomberg said Xerox would likely need to take on at least $20 billion to close the deal, which was first reported by the Wall Street Journal.

With its rejection of the Xerox offer on Sunday, the HP board also released the letter from Xerox Vice Chairman and CEO John Visentin which was sent in early November to HP. That letter talks about a “deep cultural fit” and potential synergies, including an anticipated savings of at least $2 billion within 24 months.  The letter from Visentin says that combining Xerox and HP would help the companies take a leadership role in markets such as 3D printing, digital packaging and labels and workflow software.

The letter from HP released on Sunday says that its board has “great confidence in our strategy and our ability to continue driving sustainable long-term value at HP.”

It went on to say that HP recognizes the potential benefits of consolidation, and is open to exploring whether there is value for HP shareholders through a potential combination with Xerox. But HP says it still has some fundamental questions about such a merger, including a decline in Xerox’s revenue since June of 2018, which raises questions about Xerox’s business and future prospects.

The HP board says that with more information from Xerox, the company believes it can quickly evaluate the merits of a potential transaction. Bloomberg quoted sources Sunday as saying that HP officials are open to any form of transaction that would create the most value for shareholders, and may consider buying Xerox.

There was no immediate comment from Xerox.