HP Board Rejects Xerox’s Unsolicited $30bn+ Acquisition Offer

HP Inc announced on Sunday (Nov 17) that its Board of Directors has unanimously rejected the unsolicited proposal from Xerox Holdings Corporation to acquire the Company.

Earlier this month, Xerox has launched an audacious bid to acquire its much larger rival HP for more than $30bn. At $22-a-share, Xerox’s unsolicited bid represented approximately a 20 per cent premium on HP’s closing price on Nov 5.

While Xerox’s annual revenue in 2018 was at $10 bn, HP closed 2018 with a revenue of $58bn revenues. Xerox’s relatively smaller size places a restiction on amount of equity it can offer. Xerox’s market value stands at just $8bn while HP is worth $30bn.

In a statement, John Visentin, Xerox Vice Chairman and CEO, dismissed the bid, saying it “significantly undervalues” the company.

“Our Board of Directors has reviewed and considered your unsolicited proposal dated November 5, 2019 at a meeting with our financial and legal advisors and has unanimously concluded that it significantly undervalues HP and is not in the best interests of HP shareholders.” the statement read.

HP board however signalled that it was open to the proposal, while demanding more information about Xerox’s business prospects and the scale of any potential synergies.

“We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox.” the statement added.

HP board also noted the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, whichit said raises significant questions regarding the trajectory of Xerox’s business and future prospects.

Xerox focusses on large printers and copy machines for office use while HP’s strong suite is in consumer printers. PC sales accounted for nearly two-thirds of HP’s $58bn revenues.

If the merger comes through, the combined entity would emerge as a stronger competitor to market leaders Ricoh and Canon in the commercial printing space.