There has been considerable speculation in the press regarding Xerox’s desire to gobble up HP. As if. This is an interesting move and one that HP has so far resisted on the basis that the Xerox offer at $24, up from $22 last year, is still derisory even if it is worth $27 billion.
HP chairman Chip Bergh said the board was “very concerned about Xerox’s aggressive and rushed tactics, and any process that is not based on full information is a threat to our shareholders.” HP has consequently announced a plan to cut costs by $1bn, return billions of dollars to shareholders, and to increase its share repurchasing to $15bn. All of this will be expensive, and perhaps should be happening in any case in which case shareholders can than Xerox for the reality check.
The money is of course what it’s all about and Xerox’s top man John Visentin has rounded up a shedload of cash and a commitment from various bodies to support the bid. They include MUFG, PNC, Credit Agricole, Truist and Sun Trust Robinson Humphrey, Citi, Mizuho and Bank of America. If the HP board responds to the Xerox overtures to take it over, a combined HP/Xerox would be carrying some toe curling $25 billion of debt. That might happen, as Xerox has lately been trying to replace the HP board through various shareholder shenanigans. Xerox Holdings has filed proxy materials to encourage HP Inc. shareholders to go along with its proposals for the HP board. Seems somehow desperate, but perhaps things are so bad chez Xerox, that desperate measures are needed to clean up the legacy mess.