COPIER MAKER Xerox has urged HP to reconsider its $33.5bn takeover bid, threatening that it will otherwise go hostile and make its pitch directly to shareholders.
In a letter to HP's board of directors, Xerox CEO John Visentin said that he was "very surprised" by the company's unanimous rejection of its initial takeover offer, which HP claimed "significantly undervalued" the company.
"We are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox," HP said in a statement last week."However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox."
Visentin stated that the Xerox board has accepted HP's request for due diligence and added that the firm is keen to take "the proposed acquisition of HP to completion". He gave the PC maker a 25 November deadline to reconsider its decision.
"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," Xerox wrote in its letter.
He also rejected HP's claims that a takeover was not in the best interest of HP shareholders, noting that the acqusition bid represents a 29 per cent premium over HP's 30-day average trading price.
"We are confused by this reasoning in that your own financial adviser, Goldman Sachs & Co, set a $14 price target with a 'sell' rating for HP's stock after you announced your restructuring plan," he said.
Xerox isn't the only one pushing for a deal; Billionaire activist investor Carl Icahn, who holds a 10.6 per cent stake in Xerox and a 4.24 per cent stake in HP, pushed for a merger of the two companies.
"I think a combination is a no-brainer," Icahn told the WSJ, adding in that he strongly believes "in the synergies" the two companies would enjoy if they combined.
"There will probably be a choice between cash and stock and I would much rather have the stock, assuming there's a good management team," he added. µ
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