Xerox goes on attack after HP rejection

Jo Francis
Thursday, November 21, 2019

Xerox has hit back at the HP board’s rejection of its takeover proposal, pledging to pursue the proposed acquisition and giving HP’s board a deadline of Monday or it will make an offer direct to HP’s shareholders.

Last weekend HP’s board unanimously rejected Xerox’s takeover offer, stating that it undervalued HP and was not in the best interests of shareholders.

Xerox chief executive John Visentin has now upped the ante, with a strongly-worded letter to HP’s board in response to HP’s rejection letter.

In it Visentin says Xerox was “very surprised” that its $22-a-share offer was summarily rejected.

“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,” he stated.

The letter goes on: “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 favourable 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.”

The letter concludes with a threat to go directly to HP’s shareholders if the HP board don’t play ball, with Visentin stating that the Xerox board “see no cause for further delay”.

“Accordingly, unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5:00pm 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.”

HP had not responded at the time of writing.

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