Xerox is not going to give up its attempts to combine with HP. Now it’s planning to try to replace the HP board of directors at the company’s stockholder’s meeting in April.
The leading manufacturer of office equipment Xerox is officially launching a hostile takeover to acquire computing giant HP. According to Xerox, the company will start with nominating 11 independent candidates during HP’s annual stockholders’ meeting in April. If elected, the new board will make it easier for Xerox to acquire the PC manufacturer.
The decision to play hard resulted from HP’s rejection of Xerox’s takeover bid. The price at which Xerox valued HP made up $33.5 billion. However, HP considered the proposal unattractive and dismissed it, stating that its undervalues HP and is risky for HP shareholders.
John Visentin, Xerox Vice Chairman and CEO, commented:
“HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up $24 billion in binding financing commitments and a slate of highly qualified director candidates.”
“We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realizing the synergies of a combination with Xerox”, he said in addition.
As Xerox’s announcement reads, Xerox’s nominees will include former senior executives from the world’s leading companies. In particular, the list will include Betsy Atkins, George Bickerstaff, Carolyn Byrd, Jeannie Diefenderfer, Kim Fennebresque, and more. Previously, the candidates were gaining their great experience at Aetna, United Airlines, Hilton Hotels, Novartis, Verizon, and other powerful companies.
Hostile Takeover of HP Is Outcome of Long Fight
Notably, Xerox told they want to combine the two companies for business purposes. Besides, Xerox claimed the merger would help save both companies $2 billion over the next 24 months. The company also mentioned benefits for consumers (which are not much clear). Above all, Xerox said the cost savings could lead to increased R&D investment.
However, HP did not believe these lofty aims.
HP spokesperson said:
“We believe these nominations are a self-serving tactic by Xerox to advance its proposal, that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.”
It all began in November 2019, when Xerox made its first unsolicited $33.5 billion cash-and-stock offer to HP. HP board of directors rejected the proposal, saying that the company’s value is at least three times bigger. Then, Xerox said it had secured $24 billion in financing for the proposal. However, it did not convince HP.
The hostile takeover of HP seems to be the only means for Xerox to unite the companies. And obviously, HP will hang on like grim death to maintain its independence.