HP confirms ‘business combination’ talks with Xerox

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HP Inc has confirmed it has had talks with Xerox over a potential takeover bid.

HP issued a statement after The Washington Post reported The Wall Street Journal this week reported that Xerox “has set its sights on a takeover of personal computer and printer maker HP Inc, an audacious move that would unite two fading stars of technology”.

On Tuesday, The Wall Street Journal reported that people familiar with the matter said Xerox is considering making a cash-and-stock offer for HP, which has a market value of about $27 billion.

In its statement, HP says: “As reviewed at HP’s most recent securities analyst meeting, we have great confidence in our multi-year strategy and our ability to position the company for continued success in an evolving industry, particularly given the multiple levers available to drive value creation.

“Against this backdrop, we have had conversations with Xerox Holdings Corporation from time to time about a potential business combination. We have considered, among other things, what would be required to merit a transaction. Most recently, we received a proposal transmitted yesterday.

“We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders.”

Following the statement, The Washington Post reports that HP’s stock rose more than 6% on Wednesday, to close at $19.57 per share. That values the company at roughly $29 billion.

It notes that HP has struggled to find a viable model to move beyond its profitable printing business as customers shift toward digitisation.

Last month, HP posted its fiscal 2020 financial outlook and restructuring strategy, announcing plans to cut up to 9 000 jobs globally in the next three years.

The company estimates it will incur total labour and non-labour costs of approximately $1 billion in connection with the restructuring and other charges, with about $100 million in fiscal Q4 of 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022.

These actions are expected to be completed in fiscal 2022 and are estimated to result in annualised gross run rate savings of about $1 billion by the end of fiscal 2022.

Meanwhile, The Washington Post notes the digital age has also taken its toll on Xerox, whose name is synonymous with the copying machines that became popular in the 1950s.

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