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BREAKING - Wall St awash with 'Xerox to buy HP' rumours

In a bizarre twist to the Xerox/Fuji Xerox/Fujifilm 'menage', Several financial media in the USA are reporting that Xerox may make a 'minnow-vs-whale' tilt at HP, and not the other way around as we reported recently.

Takeover Deals
But look at this the other way-around - the smaller X-fish is trying to eat the larger HP-fish!

 

The respected Barron's publication had this to say:

" Buying HP (ticker: HPQ) would also put Xerox (XRX)—which decades ago developed key technologies like the mouse and the graphical user interface at its Xerox PARC research center just minutes from HP’s offices in Palo Alto, Calif.—back in the personal computer business for the first time in years."

Citing “people familiar with the matter,” the Journal says Xerox is considering a cash-and-stock bid for HP, and that the Xerox board discussed the idea on Tuesday. The story said any bid would be at a premium to HP’s current stock price."

Barron's Eric J Savitz added:

"Xerox buying HP would be a minnow swallowing a whale—Xerox closed Tuesday with a valuation of just over $8 billion, just 30% of the current HP market cap of close to $27 billion. Xerox already has about $3.2 billion in long-term debt; HP has about $4.7 billion in long-term debt."

Other publications carrying the story include the Wall St Jornal and CNN.

With such widespread publicity and stock prices yo-yo-ing, an official announcement is surely to be made soon, confirming or denying the proposition.

As reported here, Xerox will soon be USD$2.3 billion better off from its sale of its 25% holding in Fuji Xerox back to Fujifilm.

STOP PRESS: HP has issued this statement about the speculation

My call

I have been close to both companies for three decades. While working out of London in the 1990s, both Xerox and Indigo (now HP Indigo) were clients and we, at the prestigious Bespoke Agency, helped Benny Landa launch Indigo at Ipex 1993, and for Xerox to begin catch-up on colour digital printing having ceded leadership in this area to Canon with the CLC500 and ColorBus Rip in the late 80s. I visited the famed Palo Alto Research Centre (PARC), which was a real eye-opener in how to invent great technologies and then let others profit from them!

To some, the thought of a Xerox-controlled HP would be horrific; to others it makes sense. Yet more would see it as the final act of desperation by Xerox to survive in a hyper-competetive market where it has been under-performing for the past 2 years while HP Indigo and HP's high volume inkjet division has prospered.

The 'print is dying' mantra is already being rolled out. Not to put too fine a point on it: "bullsh*t!" Print (excluding office-type desktop printing) is changing, not dying and if Xerox get hold of HP, they will control around 75% of the world digital label press market, 75% of world market for digital photobook printing and probably well in excess of 50% of the world commercial digital press market. Add to that high volume digital web presses using inkjet, for corrugated liner, folding cartons and direct mail and you have a print behemoth that is 100% digital and growing as offset, flexo and gravure surrender their market shares little-by-little.

Just how well Xerox would manage HP Indigo's hard-won market dominance, build on Benny Landa's brilliant inventions, is hard to asses as the leadership and board, under the talented John Visentin, is all new following the spill over Fujifilm's failed $6 billion take-over attempt.

Speaking of Benny Landa, his shadow is lurking longer as Drupa nears, with Landa Nanography presses being installed all over the world.

This story has a long way to go but, as we know in Mr Trump's America - anything can happen.

My feeling is that the potential reverse take-over by Xerox of HP is on a collision course with Anti-Trust legislation and HP shareholder revolt. A lot of customers would not be too happy either. But you never know, rabbits can be pulled out of hats and with savvy major Xerox shareholders like Carl Icahn and Darwin Deason behind it - who knows? - Andy McCourt