Xerox Begins Hostile $24-Share Bid for HP

Xerox Holdings went hostile against HP, launching a tender offer of $24 of cash and stock per share for the personal-computer and imaging-technology company.
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Xerox Holdings  (XRX) - Get Report went hostile against HP  (HPQ) - Get Report, launching a tender offer of $24 of cash and stock per share for the personal-computer and imaging-technology company.

The proposal includes $18.40 cash and 0.149 Xerox share for each share of HP.

Shares of HP, Palo Alto, Calif., finished the regular session on Monday up 5.2% at $21.86. Xerox closed 4.1% higher at $33.51.

The market capitalization of HP exceeds $31 billion, according to Bloomberg data.

HP, which has been fighting off Xerox's takeover effort, said in a statement that the board over 10 business days would review the offer and determine the company's best course of action.

"Our proposal offers progress over entrenchment," Xerox Vice Chairman and Chief Executive John Visentin said in a statement.

Xerox, the Norwalk, Conn., imaging-technology provider, said in a statement that it has entered into an amended and restated financing commitment letter.

The new financing arrangement adds MUFG, PNC, Credit Agricole, Truist and SunTrust Robinson Humphrey "as commitment parties to provide a portion of the financing, along with Citi, Mizuho and Bank of America under its previously confirmed $24 billion in binding financing commitments (that are not subject to any due diligence condition)," Xerox said.

In its effort to block Xerox, HP late last month said the board tripled its stock-buyback authorization to $15 billion. As part of the move, the company said it would buy back at least $8 billion of HP shares over the 12 months following the 2020 annual meeting.

HP also said it intended to maintain the growth of its dividends per share at least in line with its earnings.

In November, Xerox had initially proposed to pay $22 a share for HP. HP said the deal price undervalued the company. 

Xerox in early February raised the deal price to $24 a share and said it would launch an offer in March.

In January Xerox had said it would nominate 11 independent candidates to replace HP's board at the annual meeting. The nominees included former senior executives from companies including Aetna, United Airlines, Hilton Hotels, Novartis and Verizon.

The Wall Street Journal at the time quoted a spokesperson for HP as calling the nominations "a self-serving tactic by Xerox to advance its proposal, which significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders."

Xerox has said that the combined company would be able to reduce debt, take advantage of cost synergies, eliminate duplicative selling, general and administrative costs, create a more complete product-and-service portfolio, and cross-sell each other's technology to drive revenue gains.