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“We received a proposal”: HP addresses speculation over Xerox mega deal

HP has released a statement from its headquarters in California over increasing speculation that Xerox is considering a cash-and-stock bid for HP, and that the Xerox board discussed the idea on Tuesday. HP said: “We’ve had conversations with Xerox from time to time… most recently, we received a proposal transmitted yesterday.” 

HP Palo Alto
  HP HQ in Palo Alto, CA.

The HP statement reads:

“As reviewed at HP’s most recent Securities Analyst Meeting, we have great confidence in our multi-year strategy and our ability to position the company for continued success in an evolving industry, particularly given the multiple levers available to drive value creation,” said the HP media release.

“Against this backdrop, we have had conversations with Xerox Holdings Corporation (NYSE: XRX) from time to time about a potential business combination. 

“We have considered, among other things, what would be required to merit a transaction. Most recently, we received a proposal transmitted yesterday.  

“We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders.”

The statement comes as several financial media outlets in the USA are reporting that Xerox may make a tilt at HP.

US publication Barron's said: "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."

Xerox will soon be $US2.3 billion better off from its sale of its 25% holding in Fuji Xerox back to Fujifilm.