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Xerox initiates hostile HP takeover bid

Read time 2min 30sec

Xerox is going for the jugular after threatening to replace HP's entire board at the upcoming shareholder meeting, upping the stakes in its bid to control the company.

Xerox has been attempting a takeover for months, and HP has twice rejected the bids.

Initially, HP’s board of directors rejected Xerox’s bid to acquire the company in November last year, but the latter is still pushing for the two parties to go back to the discussion table.

HP reportedly said Xerox's proposal "significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders".

Xerox is dangling an amount of $24 billion for the deal.

According to CNBC, Xerox had initially offered HP $22 per share in its bid for the company. The bid consisted of 77% in cash and 23% stock, or $17 in cash and 0.137 Xerox share for each HP share.

According to Reuters, the Wall Street Journal reported that the US-based printer maker bought a small stake in HP in recent weeks. The stake would give Xerox the right to nominate directors for elections to be held at HP’s annual meeting.

On Thursday, the copier company said it will nominate 11 new directors to replace HP's entire board.

Those to be nominated by Xerox include former senior executives from dozens of the world’s leading companies, including Aetna, United Airlines, Hilton Hotels, Novartis, Verizon and more.

“The candidates were chosen because of their expertise overseeing and executing significant company transformations and combinations, with demonstrated track records of creating value for shareholders,” the company said in statement.

John Visentin, vice-chairman and CEO of Xerox, said: “HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up $24 billion in binding financing commitments and a slate of highly-qualified director candidates.

“We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realising the synergies of a combination with Xerox.”

HP has reportedly been struggling to find a viable model to move beyond its profitable printing business as customers shift toward digitisation.

In October, 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.

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