Xerox threatens to go hostile in its bid to buyout HP
Xerox puts 25th November deadline on its $33.5bn acquisition offer for HP Inc
Xerox has urged personal computer maker HP Inc to reconsider its $33.5 billion takeover bid - or it will go hostile and make its pitch directly to HP shareholders.
In a letter to HP's board of directors, Xerox CEO John Visentin said that he was "very surprised" to hear of HP ' s decision to reject the takeover offer.
Visentin stated that the Xerox board has accepted HP ' s request for due diligence and they are keen to take "the proposed acquisition of HP to completion".
Visentin laid out a 25th November deadline for the PC maker to reconsider its decision.
"Unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5:00 p.m. EST on Monday, November 25, 2019, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders," Xerox wrote in its letter.
Earlier this week, HP rejected Xerox ' s offer of $22 per share, saying it undervalued the company and was not in the best interests of HP shareholders.
Xerox, however, doesn ' t agree with HP ' s argument.
Visentin noted that the acquisition bid represents a 29 per cent premium over HP's 30-day average trading price.
"We are confused by this reasoning in that your own financial adviser, Goldman Sachs & Co, set a $14 price target with a ' sell ' rating for HP ' s stock after you announced your restructuring plan," Xerox stated.
Earlier this month, Xerox surprised analysts by making a $33.5 billion cash-and-stock offer to acquire HP Inc., a company more than three times its size. Xerox said it was ready to pay $22 per share, consisting of 77 per cent cash and 23 per cent stock (or $17 in cash and 0.137 Xerox share for each HP share).
Many analysts see a merit in the merger of two companies to better deal with a stagnating printing market. But, there are challenges as well to the integration of two firms, given their different pricing models and offerings.
According to the Wall Street Journal, Xerox has received an informal funding assurance from a leading bank for this deal.
Billionaire activist investor Carl Icahn said last week that he was a proponent of the merger of two companies.
Icahn currently holds a 10.6 per cent stake in Xerox and a 4.24 per cent stake in HP.