HP Inc. (NYSE: HPQ) today announced that its Board of Directors
(the “HP Board”), after consultation with its independent financial
and legal advisors, has concluded that the unsolicited exchange
offer from Xerox Holdings Corporation (“Xerox”) to acquire all
outstanding common shares of HP for consideration consisting of
cash, Xerox common stock, or a combination thereof (the “Xerox
Offer” or “Offer”) is not in the best interests of HP shareholders.
The HP Board unanimously recommends that HP shareholders reject
the Offer and NOT tender their HP shares pursuant
to the Offer.
“Our message to HP shareholders is clear: the Xerox offer
undervalues HP and disproportionately benefits Xerox shareholders
at the expense of HP shareholders,” said Chip Bergh, Chair of HP’s
Board of Directors. “The Xerox offer would leave our shareholders
with an investment in a combined company that is burdened with an
irresponsible level of debt and which would subsequently require
unrealistic, unachievable synergies that would jeopardize the
entire company.”
"At HP, we’re creating value, not risk,” said Enrique Lores,
HP’s President and CEO. "HP is a trusted brand with a strong track
record of value creation and we’re executing a clear plan that will
drive significant earnings growth. We’re well positioned in our
categories, aggressively attacking costs and pursuing the most
value creating path for our shareholders."
Reasons for the HP Board’s Recommendation
As further detailed in the Schedule 14D-9 filed with the
Securities and Exchange Commission and published on HP’s website,
the HP Board considered numerous factors in reaching its
recommendation, including but not limited to:
- The Xerox Offer, in effect, principally offers HP shareholders
something they already own, and would disproportionately benefit
Xerox shareholders relative to HP shareholders.
- The Xerox Offer would use HP’s balance sheet as transaction
consideration for the benefit of Xerox shareholders.
- The Xerox Offer meaningfully undervalues HP by failing to
reflect the full value of HP’s assets and its standalone strategic
and financial value creation plan.
- HP has a track record of execution that has resulted in strong,
consistent operational and financial performance.
- The HP Board believes that HP’s standalone plan has positioned
HP for significant value creation.
- HP’s strong balance sheet and financial flexibility provide
multiple levers for value creation.
- The HP Board believes that the Xerox Offer would compromise the
future of HP and the value of shares of HP common stock by
transferring value to Xerox shareholders and leaving HP
shareholders with an investment in a combined company with an
irresponsible capital structure, premised on unrealistic synergies
estimates.
- HP believes that Xerox’s “synergy” estimates, including cost
cuts, exceed reasonably achievable levels.
- The Xerox Offer includes a significant equity component, the
value of which the HP Board believes would be subject to
significant risks and uncertainties.
- Xerox does not have experience operating businesses in the
sectors in which HP operates, including within Personal Systems,
Home Printing, and 3D and Digital Manufacturing.
- Xerox has been experiencing declining sales and its recent sale
of its interest in the Fuji-Xerox joint venture raises significant
concerns about its future position.
- HP believes that Xerox’s cost-cutting has come at the expense
of long-term value creation, and Xerox has demonstrated a lack of
focus on research and development.
- The quantity and nature of the conditions of the Xerox Offer
create significant uncertainty and risk.
- The HP Board believes that Xerox’s urgency in launching the
Offer, while simultaneously running a full slate of director
nominees for election at HP’s 2020 Annual Meeting of Shareholders,
evidences Xerox’s desperation to acquire HP to address its
continued business decline.
- The HP Board has received an inadequacy opinion from each of
Goldman Sachs & Co. LLC (“Goldman Sachs”) and Guggenheim
Securities, LLC (“Guggenheim Securities”) to the effect that, as of
March 3, 2020, and based on and subject to the matters considered,
the procedures followed, the assumptions made and various
limitations of and qualifications to the review undertaken set
forth in their respective written opinions, the consideration
proposed to be paid to the holders (other than Xerox and any of its
affiliates) of shares of HP common stock pursuant to the Xerox
Offer was inadequate from a financial point of view to such
holders. The full text of the written opinion of each of Goldman
Sachs, dated March 3, 2020, and Guggenheim Securities, dated March
3, 2020, which sets forth the matters considered, the procedures
followed, the assumptions made and various limitations of and
qualifications to the review undertaken in connection with each
such opinion, is included in Annex B and Annex C, respectively, to
the Schedule 14D-9. Each of Goldman Sachs and Guggenheim Securities
provided their respective opinions for the information and
assistance of the HP Board in connection with its consideration of
the Xerox Offer. The respective opinions of Goldman Sachs and
Guggenheim Securities are not advice or a recommendation as to
whether any holder of shares of HP Common Stock should tender its
shares of HP Common Stock in connection with the Xerox Offer or
otherwise how to act in connection with the Xerox Offer or any
other matter.
NO ACTION is required to REJECT
the Xerox Offer.
Investor Presentation and Video
HP recently posted a presentation regarding the Company’s
strategic and financial value creation plan as well as an
associated video featuring members of the HP Board and management
team. The presentation and video are available on HP’s website at
https://investor.hp.com/events/default.aspx.
Advisors
Goldman Sachs & Co. LLC and Guggenheim Securities, LLC are
serving as financial advisors, and Wachtell, Lipton, Rosen &
Katz is legal advisor, to HP.
Forward-Looking Statements
This document contains forward-looking statements that involve
risks, uncertainties and assumptions. If the risks or uncertainties
ever materialize or the assumptions prove incorrect, actual results
may differ materially from those expressed or implied by such
forward-looking statements and assumptions.
All statements other than statements of historical fact are
statements that could be deemed forward-looking statements,
including but not limited to any statements about the exchange
offer; projections of net earnings, net earnings per share, free
cash flow, operating profit, debt to EBITDA ratio, or other
financial items; any statements of expectation or belief; any
statements regarding HP’s long term plan, future strategy,
potential future share repurchases, other potential returns of
capital or any potential strategic transactions; any statements
relating to the plans, strategies and objectives of management for
future operations, including, but not limited to, our go-to-market
strategy, the execution of restructuring plans and any resulting
cost savings, including any projections of the amount, timing or
impact of cost savings or restructuring or other charges, planned
structural cost reductions and productivity initiatives, net
revenue or profitability improvements or other financial impacts;
any statements concerning the expected development, performance,
market share or competitive performance relating to products or
services; any statements regarding current or future macroeconomic
trends or events and the impact of those trends and events on HP
and its financial performance; and any statements of assumptions
underlying any of the foregoing.
Risks, uncertainties and assumptions include factors relating to
HP’s ability to execute on its strategic plan, including the
recently announced initiatives, business model changes and
transformation; execution of planned structural cost reductions and
productivity initiatives; potential developments involving Xerox
Holdings Corporation; HP’s ability to complete any contemplated
share repurchases, other capital return programs or other strategic
transactions; the need to address the many challenges facing HP’s
businesses; the competitive pressures faced by HP’s businesses;
risks associated with executing HP’s strategy, business model
changes and transformation; successfully innovating, developing and
executing HP’s go-to-market strategy, including online, omnichannel
and contractual sales, in an evolving distribution and reseller
landscape; successfully competing and maintaining the value
proposition of HP’s products, including supplies; the impact of
macroeconomic and geopolitical trends and events; the need to
manage third-party suppliers, manage HP’s global, multi-tier
distribution network, limit potential misuse of pricing programs by
HP’s channel partners, adapt to new or changing marketplaces and
effectively deliver HP’s services; challenges to HP’s ability to
accurately forecast inventories, demand and pricing, which may be
due to HP’s multi-tiered channel, sales of HP’s products to
unauthorized resellers or unauthorized resale of HP’s products; the
protection of HP’s intellectual property assets, including
intellectual property licensed from third parties; risks associated
with HP’s international operations; the development and transition
of new products and services and the enhancement of existing
products and services to meet customer needs and respond to
emerging technological trends; the execution and performance of
contracts by HP and its suppliers, customers, clients and partners;
the hiring and retention of key employees; integration and other
risks associated with business combination and investment
transactions; the results of the restructuring plans, including
estimates and assumptions related to the cost (including any
possible disruption of HP’s business) and the anticipated benefits
of the restructuring plans; disruptions in operations from system
security risks, data protection breaches, cyberattacks, extreme
weather conditions, medical epidemics or pandemics such as the
novel coronavirus, and other natural or manmade disasters or
catastrophic events; the impact of changes in tax laws, including
uncertainties related to the interpretation and application of the
Tax Cuts and Jobs Act of 2017 on HP’s tax obligations and effective
tax rate; the resolution of pending investigations, claims and
disputes; and other risks that are described in HP’s Annual Report
on Form 10-K for the fiscal year ended October 31, 2019, and HP’s
other filings with the SEC.
Certain financial information set forth in this document
reflects estimates based on information available at this time.
While HP believes these estimates to be reasonable, these amounts
could differ materially from amounts reported in HP’s Quarterly
Reports on Form 10-Q for the fiscal quarters ended January 31,
2020, April 30, 2020 and July 31, 2020, Annual Report on Form 10-K
for the fiscal year ended October 31, 2020, and HP’s other filings
with the Securities and Exchange Commission. HP assumes no
obligation and does not intend to update these forward-looking
statements. HP’s Investor Relations website at
http://investor.hp.com contains a significant amount of information
about HP, including financial and other information for investors.
HP encourages investors to visit its website from time to time, as
information is updated, and new information is posted. The content
of HP’s website is not incorporated by reference into this document
or in any other report or document HP files with the SEC, and any
references to HP’s website are intended to be inactive textual
references only.
Important Information
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. In response to the
exchange offer commenced by Xerox, HP has filed a
solicitation/recommendation statement on Schedule 14D-9 with the
SEC. HP SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ HP’S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 BECAUSE IT
CONTAINS IMPORTANT INFORMATION. Shareholders may obtain free copies
of the solicitation/recommendation statement on Schedule 14D-9, as
well as any other documents filed by HP with the SEC, without
charge at the SEC’s website at www.sec.gov. In addition, investors
and security holders will be able to obtain free copies of these
documents from HP by directing a request to Investor Relations,
1501 Page Mill Road, Palo Alto, CA 94304, or by calling (650)
857-1501.
HP has filed a preliminary proxy statement with the SEC in
connection with the solicitation of proxies for the 2020 Annual
Meeting of Shareholders, and a definitive proxy statement and a
WHITE proxy card will be filed with the SEC and mailed to HP’s
shareholders. HP SHAREHOLDERS ARE URGED TO READ ANY PROXY STATEMENT
AND OTHER RELEVANT MATERIALS IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may
obtain free copies of these and other SEC filings made by HP (when
available) without charge from the sources indicated above.
Certain Information Concerning Participants
HP and certain of its directors and executive officers may be
deemed to be participants in the solicitation of proxies under the
rules of the SEC. Information regarding the names, affiliations and
interests of HP’s directors and executive officers is set forth in
the preliminary proxy statement for the 2020 Annual Meeting of
Shareholders and will be set forth in the definitive proxy
statement. Shareholders may obtain free copies of these documents
without charge from the sources indicated above.
About HP Inc. HP Inc. (NYSE: HPQ) creates
technology that makes life better for everyone, everywhere. Through
our product and service portfolio of personal systems, printers and
3D printing solutions, we engineer experiences that amaze. More
information about HP Inc. is available at www.hp.com.
Editorial contacts
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