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".

Advertisement - Article continues below

"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.

Advertisement
Advertisement - Article continues below

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.

Advertisement - Article continues below

"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."

Advertisement

Most Popular

Visit/development/application-programming-interface-api/355192/apple-buys-dark-sky-weather-app-and-leaves
application programming interface (API)

Apple buys Dark Sky weather app and leaves Android users in the cold

1 Apr 2020
Visit/security/cyber-crime/355171/fbi-warns-of-zoom-bombing-hackers-amidst-coronavirus-usage-spike
cyber crime

FBI warns of ‘Zoom-bombing’ hackers amid coronavirus usage spike

31 Mar 2020
Visit/data-insights/data-management/355170/oracle-cloud-courses-are-free-during-coronavirus-lockdown
data management

Oracle cloud courses are free during coronavirus lockdown

31 Mar 2020