HP board rejects Xerox takeover bid

Marco Green
November 19, 2019

"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 in the statement.

In a letter sent to Xerox Chief Government John Visentin on Sunday, HP unanimously rejected Xerox's unsolicited give to purchase HP for $33.5 billion, $22 a share, expressing that the proposal "significantly undervalues HP and is not in the very best pursuits of HP shareholders".

HP has, at the very least for now, put an finish to the likelihood that it will be acquired by Xerox.

Xerox offered a $33.5-billion buyout deal to HP - a company with a market value three times bigger than the potential buyer's. Zacks Investment Research raised Xerox from a "hold" rating to a "strong-buy" rating and set a $36.00 price objective on the stock in a research report on Sunday, November 3rd.

Xerox originally approached HP on November 5 with what HP called "a proposal" about a possible acquisition.

A representative for Xerox, which is based in Norwalk, Connecticut, could not be reached immediately for comment.

Activist investor Carl Icahn, who took over Xerox's board past year together with fellow billionaire businessman Darwin Deason, said in an interview with the Wall Street Journal last week that he was not set on a particular structure for a deal with HP, as long as a combination is achieved. Advisor Partners LLC now owns 7,367 shares of the information technology services provider's stock valued at $261,000 after buying an additional 350 shares in the last quarter. If the deal had been completed, HP shareholders would own approximately 48% of the combined company.

HP shares were at $19.10 in premarket trading, while those of Xerox were down 4 percent at $37.38.

Xerox scrapped its $6.1 billion deal to merge with Fujifilm previous year under pressure from Icahn and Deason. Earlier this month, it confirmed it was in ongoing talks with Xerox over a possible takeover. Fujifilm also agreed to drop a lawsuit against Xerox, which it was pursuing following their failed merger. HP bought Autonomy for $11.1 billion in 2011 as the centerpiece of its unsuccessful pivot to software.

In addition to now being a single of the world's most significant printer and printing engineering organizations, HP would make and sells desktop and laptop PCs and products and services. Last month, HP announced a major cost-cutting plan, which will see the company reduce its global headcount by between 7,000 and 9,000 employees in order to save $1 billion Dollars by fiscal 2022.

Moving further back, the stock noticed a performance of 21.23% over the last six months and spotted 97.06% performance since the start of the calendar year. "However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox", it wrote.

Other reports by Click Lancashire

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