HP rejects Xerox's takeover bid
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HP rejects Xerox's takeover bid
HP has rejected Xerox's takeover bid. Reports say HP's board unanimously rejected the bid, saying that the offer undervalues HP.
A little under two weeks ago, it was reported that Xerox had made a takeover bid for HP. It was peculiar because as a company, HP was over three times as big.
Xerox's offer was US$22 per share which consists of 77% cash and 23% stock — US$17 in cash and 0.137 Xerox share for each HP share.
However, that offer was not good enough. HP's board unanimously decided that the offer undervalues the company and that it is not in the best interests of shareholders.
HP said in a statement:
In reaching this determination, 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.
But a deal could still be made. HP said that it recognized the potential benefits of a merger and suggested that it could switch roles and acquire Xerox instead.
Again from HP:
With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction
Analysts believe that the coming together of these two companies can lead to substantial cost savings and a stronger printer lineup, which is said to be crucial in light of a declining printer market.
