- Xerox’s CEO said in a letter Tuesday to HP’s board of directors that the company intends to take its $US33.5 billion takeover bid directly to HP’s shareholders.
- “We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity,” the letter said.
- The move sets up a potential hostile takeover of HP after the company’s board rejected Xerox’s offer earlier this month.
- Watch Xerox and HP trade live on Markets Insider.
“We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity,” Xerox CEO John Visentin wrote in a letter to HP’s board of directors Tuesday.
He added: “Your refusal to engage in mutual due diligence with Xerox defies logic.”
Visentin also said Xerox won’t apologise for what HP called “aggressive tactics,” and that the best way to determine the scope of the opportunity is through “mutual due diligence,” which HP has refused to engage in.
“The potential benefits of a combination between HP and Xerox are self-evident,” Visentin said. “Together, we could create an industry leader – with enhanced scale and best-in-class offerings across a complete product portfolio.”
Xerox could potentially pursue a hostile takeover of HP through a tender offer, which occurs when a prospective acquirer approaches all the shareholders of a publicly traded firm with an offer to buy their stock.
HP’s board unanimously rejected Xerox’s bid earlier this month, arguing it “significantly undervalues” the company. The board also expressed worry that the impact of a large debt load could potentially devalue the combined company.
The firm also said it was open to future partnerships and the possibility of looking into a smaller transaction.
“We recognise the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” a letter signed by HP CEO Enrique Lores and Board Chairman Chip Bergh said.
Xerox extended its bid on November 5, which represented around a 20% premium to HP’s closing price that day. The company said it would use both cash and stock to fund the transaction, and that the tie-up would generate more than $US2 billion in savings within two years through cost synergies.
Carl Icahn, an activist investor and vocal Xerox shareholder, announced his support for the deal along with a billion-dollar stake in HP earlier this month.
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