Ever since Xerox set its sights on HP last November, the companies have been engaged in an ongoing battle. Xerox would like very much to take over the much larger HP, while the printer giant has so far rejected Xerox’s advances. Today, Xerox decided to sweeten the pot, raising its offer by two dollars per share, from $22 to $24, or about $34 billion in total.
The company says it will make a tender offer officially on around March 2nd, which should give it more time to lobby shareholders, but Xerox claims to have spoken to larger HP stockholders, and they believe the larger number could finally push this over the finish line. Given HP’s previous reluctance, that remains to be seen.
“Xerox has met, in some cases multiple times, with many of HP’s largest stockholders. 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. The tender offer announced today will enable these stockholders to accept Xerox’s compelling offer despite HP’s consistent refusal to pursue the opportunity,” the company wrote in a statement today.
The current dance between the two companies dates back to last fall, with Xerox believing the two companies would match up well together to become a printer giant, while HP’s board unanimously rejected the offer.
In a rejection letter last November, the company made clear it didn’t appreciate or welcome Xerox’s overtures:
“We reiterate that we reject Xerox’s proposal as it significantly undervalues HP.
“Additionally, it is highly conditional and uncertain. 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,” the letter stated.
At the end of November, Xerox vowed to take the offer to shareholders. More recently, it said it would try to replace all of the HP board members who rejected the offer previously with a friendlier slate of candidates. That is slated to be voted on by stockholders at the HP stockholders meeting in April.
HP has not responded yet to this latest offer. Surprisingly, HP stock was down .12/share, or 0.81%, in early trading.
Note: We requested comment from HP, but had not heard from the company as we went to publish. Should this change we will update the report.