Xerox Takes Case for HP Deal to Shareholders
December 09 2019 - 11:00AM
Dow Jones News
By Colin Kellaher
Xerox Corp. (XRX) said it will begin meeting on Monday with
shareholders of HP Inc. (HPQ) to press its case for a $33 billion
union of the companies.
In an investor presentation, Xerox said its proposal, worth $22
a share in cash and stock when it was made in November, offers
immediate cash value and equity upside to HP's shareholders.
Printer and personal-computer maker HP rejected the offer from
its smaller rival as too low and highly conditional, and it has
declined to enter into a due-diligence process or merger talks.
In its presentation, Xerox said it believes the equity portion
of the deal could be worth about $14 a share for HP holders, before
any revenue synergies. Coupled with the $17 cash portion, Xerox
said its bid offers a pro-forma implied value of roughly $31 a
share for HP holders, who would own 48% of the combined
company.
Xerox also said it would maintain its $1-a-share annual
dividend, and that the combined company would maintain an
investment-grade credit rating.
The Norwalk, Conn., copier maker last month said it would take
its bid directly to HP's shareholders after HP refused to engage in
a due-diligence process.
Xerox, which is far smaller than HP, is offering $17 a share in
cash and 0.137 share for each HP share in a proposal that would
require considerable additional borrowing by Xerox to fund the cash
portion.
Billionaire investor Carl Icahn, who owns a 10.85% stake in
Xerox and a 4.24% interest in HP, last week blasted HP's board for
not engaging in talks with Xerox on a merger, which he has called a
"no brainer."
HP shares rose 0.3% to $20.57 in early trading Monday, while
shares of Xerox edged up 0.6% to $38.01.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
December 09, 2019 10:45 ET (15:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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