HP Inc has rejected an offer from Xerox to buy the company for $335-billion, but the saga isn’t over yet – Xerox is now threatening a hostile takeover attempt.
Xerox has given HP Inc until Monday (25 November) to consider the offer, or it will take it directly to shareholders.
Xerox vice-chairman and CEO John Visentin has penned a letter to HP CEO Enrique Lores and chairman Charles “Chip” Bergh, offering to settle the deal on friendly terms, failing which it would take the offer to shareholders.
The full text of the letter sent to HP is as follows:
Dear Chip and Enrique,
We were very surprised that HP’s Board of Directors summarily rejected our compelling proposal to acquire HP for $22.00 per share, comprising $17.00 in cash and 0.137 Xerox shares for each HP share, claiming our offer “significantly undervalues” HP.
Frankly, we are confused by this reasoning in that your own financial advisor, Goldman Sachs & Co., set a $14 price target with a “sell” rating for HP’s stock after you announced your restructuring plan on October 3, 2019.
Our offer represents a 57% premium to Goldman’s price target and a 29% premium to HP’s 30-day volume weighted average trading price of $17.
Moreover, our offer is neither “highly conditional” nor “uncertain” as you state. There will be NO financing condition to the completion of our acquisition of HP.
While we are glad to see that HP’s Board of Directors acknowledges the substantial merits of a business combination between Xerox and HP and are open to exploring the value opportunity for our respective shareholders, your response lacks a clear path forward.
You have requested customary due diligence, which we have accepted, but you have refused to agree to corresponding due diligence for Xerox.
Any friendly process for a combination of this type requires mutual diligence – your proposal for one-way diligence is an unnecessary delay tactic.
In light of favorable markets and terms, Xerox is determined to capture the compelling opportunity for our respective shareholders and strongly encourages HP’s Board of Directors not to sanction further delay in light of our extensive discussions to date.
Xerox remains willing to devote the resources necessary to complete mutual due diligence over the next three weeks and confirm the substantial cost and revenue synergies that we both believe could be achieved through a combination.
The Xerox Board of Directors is determined to expeditiously pursue our proposed acquisition of HP to completion – we see no cause for further delay.
Accordingly, unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5:00 p.m. EST on Monday, November 25, 2019, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders.
The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction.
We look forward to your prompt response.
Sincerely,
John Visentin
Vice Chairman and CEO
Xerox Holdings Corporation