Xerox aiming for hostile HP takeover
The gloves are off in New York as two of the biggest names in print are now in a battle for control, with Xerox aiming at making a hostile takeover of HP, following the latter's repudiation of its initial $33bn bid.
Xerox is launching its bid for a company that is more than three times its size, with a cash and shares offer that puts a 21 per cent premium on the current HP price. That price, though, will still be less than HP's year high. .
The HP board has rejected both the initial Xerox bid and its subsequent publicly-stated intention to pursue its unsolicited action. Xerox has said it is “determined” to acquire HP, and says it will go direct to shareholders.
The HP board accuses Xerox of “aggressive words and actions”, and questions the ability of Xerox to raise the cash for the deal. It says the deal significantly undervalues HP, and says it will place “an outsized debt” on the merged business - around $25bn. HP goes on to say it has concerns about both the short term and long term viability of Xerox.
Xerox CEO John Vinsentin shot back saying he "will not apologise" for his aggressive tacticts, and telling the HP board its refusal to accept the Xerox offer "defies logic", and telling them Xerox will now go direct to shareholders.
Under the proposed deal, HP would have had 48 per cent of the new business. HP is currently more than triple the size of Xerox, with a market capitalisation of US$28bn compared to the US$8.2bn of its suitor. Xerox sales last year were US$9.8bn, compared to US$58.5bn of HP. Financial analysts say the combined business will be able to shed US$2bn a year in back end costs.
Major Xerox shareholders, billionaires Carl Icahn and Darwin Deason, are behind the plan. Current CEO Visentin comes from a private equity background, and is in place thanks to Icahn and Deason. They are the duo who fought against the Xerox board’s move to sell to Fujifilm, resulting in then-CEO Jeff Jacobson and other directors losing their jobs, with Fujifilm taking legal action over the failed $6bn deal. That legal action ended two weeks ago when Xerox agreed to sell its 25 per cent in their joint venture Fuji Xerox, which is the Xerox distributor in Asia, Australia, and New Zealand, to Fujifilm. The bid for HP has been launched since then.
HP and Xerox are two of the biggest suppliers to the global commercial print industry. HP will have the biggest stand at drupa next year, and Xerox won't be far behind. A combined business would be the largest print technology company on the planet.