Xerox weighs $27 billion takeover of HP: report
06 Nov 2019
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Xerox Holdings Corp is reported to be considering a takeover of personal computer and printer maker HP Inc, which is thrice its size, in a move that would merge the two rivals in the market for printers.
Xerox is planning to make a cash-and-stock offer for HP Inc at a premium to its market value of about $27 billion, the Wall Street Journal reported on Tuesday.
The US printer maker's board discussed the possibility on Tuesday, the newspaper said, citing people familiar with the matter. There is, however, no guarantee that Xerox will follow through with an offer, it added.
Xerox has also received an informal funding commitment from a major bank, known as a "highly confident letter", WSJ said.
Xerox also expects a $2.3 billion windfall from Fujifilm’s acquisition of its stake in joint venture Fuji Xerox Co.
Xerox Holdings Corporation on Tuesday announced the sale of its 25 per cent stake in its joint venture Fuji Xerox Co to Fujifilm Holdings Corporation and certain of its subsidiaries.
Xerox said the move will simplify and set a new course for the companies’ strategic sourcing relationship going forward.
The agreement also involves sale of Xerox’s 51% stake in Xerox International Partners (XIP), an OEM joint venture between Xerox and Fuji Xerox, to an affiliate of Fuji Xerox. This, together with the grant of a new IP licence, will allow Fuji Xerox to OEM certain products (such as printer engines) to named parties that are existing customers of XIP on a worldwide basis in exchange for a fixed royalty.
This also ends a legal wrangle that started with Fujifilm’s filing a $1 billion lawsuit against Xerox after last year’s terminated merger.
Total after-tax proceeds to Xerox from the transactions will include accrued but unpaid dividends through the date of the closings and are expected to be approximately $2.3 billion. Xerox expects to use the proceeds opportunistically to pursue accretive M&A in core and adjacent industries, return capital to shareholders and pay down its $550 million December 2019 debt maturity.
Xerox had scrapped its $6.1 billion deal to merge with Fujifilm last year following objections raised by investor group led by two of its main investors, Carl Icahn and Darwin Deason.
HP has been struggling with its printer business segment recently. The company's segment revenue was down 5 per cent on-year when it reported its third-quarter results in August.
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