HP rejects Xerox's $33.5 billion bid ahead of a Monday deadline to take it or face hostile takeover, bringing the 2 tech giants closer to a proxy war

HPHP CEO Enrique Lores.
  • HP rejected Xerox’s $US33.5 billion bid ahead of a Monday deadline to accept a merger or face a hostile takeover bid, setting up the possibility of a proxy war between the two tech companies.
  • Xerox had offered to buy HP for $US22 a share. HP rejected that offer last week, prompting Xerox CEO John Visentin to write back with an ultimatum.
  • HP called Xerox’s bid opportunistic, stressing the Xerox’s deal didn’t make sense. “It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information,” HP CEO Enrique Lores and the company’s chairman, Chip Bergh, said in a letter to Visentin.
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It looks as if HP and Xerox may be going to proxy war.

HP on Sunday again rejected Xerox’s $US33.5 billion bid for the tech giant, ahead of a Monday deadline to take the offer or face a hostile bid.

Xerox had offered to buy HP for $US22 a share last week, which HP rejected. That prompted Xerox to send a follow-up letter giving HP until Monday to either agree to formal merger talks or it “will take its compelling case” directly to HP shareholders.

HP hit back by calling Xerox’s proposal “opportunistic,” stressing that the merger simply didn’t make sense.

“It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information,” HP CEO Enrique Lores and the company’s chairman, Chip Bergh, said in a letter to Xerox CEO John Visentin.

HP reiterated its concerns Xerox’s ability to pull off such a transaction, given the state of the printing-services giant’s business.

“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,” Lores and Bergh wrote.

They also noted that Xerox had “missed consensus revenue estimates in four of the last five quarters” and that the company’s revenue had dropped to $US9.2 billion from $US10.2 billion since June 2018.

“When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path,” the HP executives said.

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