HP Rejects Xerox Takeover Bid But Says Ready to Talk
November 17 2019 - 4:41PM
Dow Jones News
By Colin Kellaher
HP Inc. (HPQ) rejected a $33 billion takeover proposal from
Xerox Holdings Corp. (XRX) but it didn't rule out a deal to combine
the printer makers.
HP on Sunday said its board unanimously rejected the Xerox bid,
saying it it significantly undervalues the Palo Alto, Calif.,
company and that is isn't in the best interests of its
shareholders.
Xerox earlier this month offered to buy HP for $22 a share in
cash and stock in a bold deal that would unite companies that were
once giants of American industry but whose fortunes have waned in
the digital age.
HP, in a letter to Xerox Vice Chairman and Chief Executive John
Visentin, called the Xerox offer "highly conditional" and said it
was worried about Xerox's declining revenue and the "outsized debt
levels" that would result from the proposed deal.
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.
But HP also said it is willing to discuss a deal.
"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," HP said
it its letter. "With substantive engagement from Xerox management
and access to diligence information on Xerox, we believe that we
can quickly evaluate the merits of a potential transaction."
Activist investor Carl Icahn last week called the proposed union
of Xerox and HP "a no-brainer" that could yield big profits for
investors.
Mr. Icahn owns a 10.6% stake in Norwalk, Conn.-based Xerox and a
4.24% stake in HP.
Shares of Xerox closed Friday at $38.94, for a market
capitalization of roughly $8.53 billion, while HP shares closed at
$20.18, giving the company a market capitalization of about $29.9
billion.
-Cara Lombardo contributed to this article.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
November 17, 2019 16:26 ET (21:26 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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