Xerox raises HP offer to $24 per share

Xerox has signaled its intention to improve on its offer for HP with the announcement that it intends to launch a tender offer on or around March 2, 2020 for all of the outstanding shares of common stock of HP Inc for $24.00 per share, which will be comprised of $18.40 in cash and 0.149 Xerox shares for each HP share.

HP has developed a range of Stitch dye sub printers, seen here at Heimtextil 2020.

Essentially, Xerox is ratcheting up the pressure on HP having already attempted to nominate 11 candidates to HP’s board of directors for its 2020 AGM. HP issued a long, rambling and rather stuffy statement about the independence of its directors versus the influence that Carl Icahn has over these nominees and the Xerox board, which probably means that HP is struggling to find a legal way to turn down these candidates. For good measure, HP added: “Due to Mr. Icahn’s ownership position, he would disproportionately benefit from an acquisition of HP by Xerox at a price that undervalues HP.”

In the meantime, Xerox claims to have met with many of HP’s largest stockholders, stating: “These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP.” Presumably the shareholders also said that they wanted more money or else Xerox wouldn’t have raised its offer. 

According to Xerox, $24.00 per share represents a 41% premium to HP’s unaffected 30-day volume weighted average trading price of $17.00. It also values the acquisition at around $35bn. The offer is subject to Xerox being able to acquire at least a majority of the HP stock. HP has dismissed Xerox’s previous offer, calling it an attempt to “use HP’s financial capacities for the benefit of Xerox shareholders.”

Meanwhile, HP has said that it will discuss its financial results for the quarter ended 31st January 2020 on Monday 24th February, together with its plans to offer shareholders more value to persuade them not to take the Xerox offer. At the very least, this should give us a rough idea of how HP is going to handle its shareholders ahead of the AGM, with a date still to be announced for this.


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