In the latest move of its attempt to take control of its much larger rival, Xerox has raised its offer to buy HP from $22 a share to $24 a share and says it will launch a public takeover bid in March by offering to buy shares directly from HP investors. Analysts say the new offer represents a bid of about $US35 billion, including debt, compared to an earlier $US33.5 billion offer that was rejected last year by HP’s board.
“Xerox announced its intention to launch a tender offer on or around March 2, 2020 for all of the outstanding shares of common stock of HP at a price of $24.00 per share, which will be comprised of $18.40 in cash and 0.149 Xerox shares for each HP share,” Xerox said in a statement from its headquarters in Connecticut.
The iconic US print company says its takeover proposal is supported by many of HP’s biggest shareholders.
“Xerox has met, in some cases multiple times, with many of HP’s largest stockholders. These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP. The tender offer announced today will enable these stockholders to accept Xerox’s compelling offer despite HP’s consistent refusal to pursue the opportunity.
“Xerox’s offer provides HP stockholders with both significant, immediate cash value, and meaningful upside via equity ownership in the combined company. The headline offer price of $24.00 per share represents a 41% premium to HP’s unaffected 30-day volume weighted average trading price of $17.00.”
Xerox last month nominated a full slate of 11 directors it intends to nominate to replace HP’s board of directors at HP’s 2020 annual meeting of stockholders.
HP’s board says billionaire activist investor Carl Icahn - who owns 10.9% of Xerox and has a 4.2% stake in HP - is driving Xerox’s takeover bid and has warned: “His interests are not aligned with those of other HP shareholders.”
HP shares rose 2.7% in early trading to $22.32 while Xerox shares were up 1.1% to $37.61.