Xerox officially launches HP tender offer; HP rejects it

Xerox Holding Corp. officially launched its $34 billion cash-and-stock offer for HP Inc., a proposal valued at about $24 a share. (For each HP share, a holder would receive $18.40 in cash and 0.149 Xerox shares.) The offer is set to expire April 21. Xerox already nominated 11 candidates for HP’s board to help close the deal.

John Visentin, CEO, Xerox

“Our proposal offers progress over entrenchment,” said John Visentin, vice chairman and CEO of Xerox. “HP shareholders will receive $27 billion in immediate, upfront cash while retaining significant, long-term upside through equity ownership in a combined company with greater free cash flow to invest in growth and return to shareholders.”

In turn, HP management rejected the offer and recommended shareholders not to tender their shares.

“Our message to HP shareholders is clear: the Xerox offer undervalues HP and disproportionately benefits Xerox shareholders at the expense of HP shareholders,” said Chip Bergh, Chair of HP’s Board of Directors. “The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardize the entire company.”

A Bloomberg news report stated HP CEO Enrique Lores, while still new to the HP top spot, is seeking to grow the company – without a combination with Xerox – by focusing on printing services, 3D printing and high-end computers, as well as reducing headcount by 16%. The Bloomberg report noted Visentin “has criticized this plan as a piecemeal approach that won’t be as beneficial to HP as a combination.”