WSJ
Nov. 17, 2019 4:55 pm ET
HP (HPQ) rejected a $33 billion takeover offer from Xerox as too low, but the PC and printer maker made clear it is interested in discussing a deal to combine with its smaller rival.
HP Rejects Xerox Offer but Remains Open to a Deal
PC and printer maker voices concern about debt a transaction would put on combined company
The potential union got a significant push last week from activist investor Carl Icahn, who told The Wall Street Journal that a deal is a “no-brainer” that would increase returns for shareholders of both companies. Mr. Icahn has a long history with Xerox, in which he owns a 10.6% stake, and he revealed a 4.24% investment in HP that makes him its fifth largest shareholder, according to FactSet.
Mr. Icahn indicated he is open to alternate structures too, which presumably include an HP takeover of Xerox, an approach some analysts have said may make more sense.
In a sign that shareholders could be receptive to a deal, both companies’ stock prices have jumped since Xerox’s offer became public. HP’s shares closed Friday at $20.18, almost 10% above where they had been trading, while Xerox’s closed 7% higher at $38.94.
HP in its letter Sunday urged Xerox to let it perform additional due diligence so it can better understand Xerox’s recent revenue declines and analyze potential cost savings from a combination, which Xerox has pegged at roughly $2 billion.
Xerox, based in Norwalk, Conn., had held discussions with Palo Alto, Calif.-based HP in recent months, but the talks broke down after Xerox wanted to move more quickly than HP, according to people familiar with the matter. |
