HP rebuffs Xerox takeover bid

Laptop maker says offer “significantly undervalues” the organisation, though it remains open to a deal

Xerox's $30 billion takeover bid for HP has fallen flat, with the company's board unanimously rejecting the proposed deal.

On 7 November it was confirmed that the printer and copier maker was attempting to buy HP, despite the fact it's over three times Xerox's size.

In a letter to Xerox, HP's board of directors said it had "reviewed and considered" the takeover proposal, but found it "significantly undervalues HP and is not in the best interests of HP shareholders".

"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," the letter added.

The board also cited Xerox's falling revenue, which fell from $10.2 billion (£7.9 billion) in June 2018 to $9.2 billion (£7.1 billion) in June 2019, as a reason for declining the deal. HP itself is currently valued at $27 billion (£20.8 billion).

The decision is unlikely to come as a surprise to market watchers. HP's initial response stated it had "great confidence in [its] multi-year strategy and... ability to position the company for continued success in an evolving industry", a stance it reiterated in its rejection letter to Xerox.

This isn't necessarily the end of the story, though. HP has said it remains "open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox". It's unlikely this would take the form of another Xerox bid for HP given the larger company's misgivings about shareholder value and debt, but could be a merger between the two or even HP acquiring Xerox.

"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," HP's board said.

"We remain ready to engage with you to better understand your business and any value to be created from a combination."

Featured Resources

Transform the operator experience with enhanced automation & analytics

Bring networking into the digital era

Download now

Artificially intelligent data centres

How the C-Suite is embracing continuous change to drive value

Download now

Deliver secure automated multicloud for containers with Red Hat and Juniper

Learn how to get started with the multicloud enabler from Red Hat and Juniper

Download now

Get the best out of your workforce

7 steps to unleashing their true potential with robotic process automation

Download now

Most Popular

Visit/security/vulnerability/354309/patch-issued-for-critical-windows-bug
vulnerability

Patch issued for critical Windows bug

11 Dec 2019
Visit/hardware/354193/buy-it-to-grow-not-slow-your-business
Sponsored

Buy IT to grow, not slow, your business

25 Nov 2019
Visit/cloud/microsoft-azure/354230/microsoft-not-amazon-is-going-to-win-the-cloud-wars
Microsoft Azure

Microsoft, not Amazon, is going to win the cloud wars

30 Nov 2019
Visit/security/antivirus/354328/microsoft-to-scrap-security-essentials-when-windows-7-reaches-end-of-life
antivirus

Microsoft to scrap Security Essentials when Windows 7 reaches end-of-life

13 Dec 2019