Xerox Makes a New Bid for HPQ
Xerox (XRX) - Get Report made its third bid to buy Hewlett-Packard.
Xerox wants to buy Hewlett-Packard for roughly $34.85 billion, or about $24 a share. That’s a roughly 9.7% premium over (HPQ) - Get Report closing price Monday of 21.86.
HPQ shares only rose 0.6% in post-market trading, after having risen 5.15% in regular trading hours.
The offer comes after HPQ rejected a proposal from Xerox to buy the company for $23 a share. HPQ drew up an alternative to selling the company, an alternative centered on organic growth.
The first offer, of three, was for $23 a share. The sweetened offer was $24.
But Xerox’s latest offer is roughly 75% in cash and roughly 25% in Xerox stock.
“Our proposal offers progress over entrenchment,” said John Visentin, vice chairman and chief executive officer of Xerox. “HP shareholders will receive $27 billion in immediate, upfront cash while retaining significant, long-term upside through equity ownership in a combined company with greater free cash flow to invest in growth and return to shareholders.”
One thing Xerox investors should watch out for, should the transaction happen: Xerox is using $24 billion of debt secured from its lenders for the transaction. That’s about 70% of Xerox’s equity valuation of HPQ.