Xerox Puts Forward a Takeover Offer to HP Valued at $27 Billion
Dec 12, 2019 at 1:42 pm UTC by Bhushan Akolkar
· 3 min read
With a massive funding commitment from a banking giant, Xerox is planning to take over HP which is three times its size.
In what can turn out to be one of the biggest takeovers, Xerox has put forward a cash-and-stock offer for computing giant Hewlett Packard. The latest report states that both companies are looking to cut costs and this merger can help them save around $2 billion in expenses.
Xerox, which has specialized over the years in making printers and copiers, has an $8.5 billion market cap. This is one-third of the market cap of HP, currently valued at $27 billion. It is unclear how Xerox plans to go through this acquisition for HP which is over three times its size.
As per the Wall Street Journal report, Xerox has received a massive funding commitment from a major bank. Thus, the company board discussed the possibility of the takeover earlier this week on Tuesday, November 5. A statement from HP company 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.”
“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,” added the company.
HP’s stock price jumped 6 percent on Wednesday, November 6, to $19.75 per share and valuing the company at $29 billion. As the global customers have been shifting more towards digitization, HP’s printers business is feeling the heat. However, as HP used to be heavily relying on its printer business, it may need to struggle to find other viable business models.
Both these companies have been currently reeling under performance pressure. Last month, HP announced cutting 9000 jobs by 2022, which is 16% of its workforce. The computing giant plans to restructure its operations estimating to save $1 billion every year.
On the other hand, Xerox is planning to sell 25% of its stake in Fuji Xerox, which is the company’s joint venture with Japanese camera-maker Fujifilm. The stake sale is valued at around $2.3 billion.
Let us just remind you that mergers quite often are conducted not only with a view to becoming a winner in a battle with your rival but also as a logical way of continuing the business together. For example, recently Coinspeaker has reported that Peugeot and Fiat Chrysler confirmed their intention to merge to create the world’s fourth-largest carmaker.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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