Xerox secures $24bn financing for proposed HP takeover
Monday, January 6, 2020
Xerox has secured $24bn (£18.3bn) in binding financing commitments for its $33.5bn proposed acquisition of HP.
HP’s board “unanimously rejected” Xerox’s $22 per share takeover offer in November, stating that it undervalued HP. Xerox then went hostile with its takeover bid at the end of last month, and said it would take its offer directly to HP’s shareholders.
In a letter sent today (6 January) to HP chief executive Enrique Lores and chairman Chip Bergh, Xerox vice chairman and chief executive John Visentin said: “Over the last several weeks, we have engaged in constructive dialogue with many of your largest shareholders regarding the strategic benefits of our proposal to acquire HP.
“It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cashflow that could, in turn, enable increased investments in innovation and greater returns to shareholders.
“But it also became clear from our dialogue with your shareholders that you and your advisors have been questioning our ability to raise the capital necessary to finance our proposal.
“We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America.
“My offer stands to meet with you in person, with or without your advisors, to begin negotiating this transaction.”
Activist investor Carl Icahn, who has a 4.2% stake in HP and a 10.9% stake in Xerox, last month called the mooted deal “one of the most obvious no-brainers I have ever encountered in my career” and urged all HP shareholders who agreed with him to “reach out” to HP for immediate action.
HP’s share price was up by 0.63% at $20.66 in early trading this morning while Xerox’s shares were down by 0.66% to $36.09.