HP has announced the unconditional rejection by its Board of Directors of the recent Xerox Takeover Bid.
HP Rejects Takeover From Xerox!
HP said it turned down Xerox’s hostile takeover bid of $33 billion (around Rs. 2,36,469 crores), speaking it undervalued the software and printer manufacturer.
The Xerox board said the bid in a letter to John Visentin, Xerox Vice President and CEO, “significantly undervalues HP and is not in the best interests of HP shareholders … the Board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock.”.
The rejection comes less than two weeks after The Wall Street Journal (WSJ) revealed that Xerox is looking for a cash-and-stock deal worth $33.5 billion to buy HP’s PC company, which is more than HP’s current market value of about $27 billion. According to sources cited by the WSJ, Xerox’s bid was backed by “a big bank’s unofficial funding pledge.”
It said, for instance, that since June 2018, Xerox’s revenue has fallen from $10.2 (approximately Rs. 73,088 crores) to $9.2 billion (roughly Rs. 65,923 crores). And with a market value of $27 billion (nearly Rs. 1,93,467 crores), HP is three times more profitable than Xerox.
The buyout proposal was backed by billionaire investor Carl Icahn, who already held a 10.6 per cent stake in Xerox until recently buying a $1.2 billion stake in HP, according to CNBC. According to the article, he was pressing for the two companies to merge as he claimed that the merged company would support both companies ‘ investors.
Here it is worth noting that the Xerox company was looking to purchase HP Inc the hardware vendor selling PCs and computer printers rather than the data storage firm, HP Enterprise, which was spun off as a separate business back in 2015.