Xerox has picked up $24 billion of financing from Citi, Mizuho and Bank of America in order to help it press ahead with the hostile takeover of HP that it announced last month.
According to Bloomberg, this financing is a bridge loan that comes in two parts, with $19.5 billion available for 364 days, which is expected to be syndicated, and a further $4.5 billion available for 60 days that is meant to be replaced by cash on HP’s balance sheet.
John Visentin, vice chairman and CEO of Xerox, has sent another letter to HP’s board of directors, stating: “Over the last several weeks, we have engaged in constructive dialogue with many of your largest shareholders regarding the strategic benefits of our proposal to acquire HP. It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cash flow that could, in turn, enable increased investments in innovation and greater returns to shareholders.”
Xerox has offered HP shareholders $22 per share, which values HP at $33.5 billion. HP’s directors have previously written: “In particular, there continues to be uncertainty regarding Xerox’s ability to raise the cash portion of the proposed consideration and concerns regarding the prudence of the resulting outsized debt burden on the value of the combined company’s stock even if the financing were obtained.”
Visentin addresses this directly in his letter, stating: “We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America.”
Visentin concludes his letter with an offer “to meet with you in person, with or without your advisors, to begin negotiating this transaction.” No doubt we’ll get HPs reaction in due course.
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