HP Rejects Another Xerox Acquisition Offer

Posted on March 5, 2020 by Paul Thurrott in Hardware with 15 Comments

HP has rejected another takeover offer from Xerox, for $35 billion, claiming that it undervalues the company.

“Our message to HP shareholders is clear: The Xerox offer undervalues HP and disproportionately benefits Xerox shareholders at the expense of HP shareholders,” HP chairman Chip Bergh said in a prepared statement. “The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardize the entire company.”

Xerox announced its intention to acquire HP in November, and it said it would go the hostile route if a deal couldn’t be reached. Its initial offer for HP was $33.5 billion, so it hasn’t really moved the needle too much on price over the past several months.

Xerox not coincidentally also sold its 25 percent stake in Fuji Xerox after investor activism scuttled a deal between the two companies. So HP is plan B, and the firm is believed to want HP mostly for its printer business. But HP is also the second-biggest PC maker in the world.

“At HP, we’re creating value, not risk,” HP president and CEO Enrique Lores says. “HP is a trusted brand with a strong track record of value creation and we’re executing a clear plan that will drive significant earnings growth. We’re well-positioned in our categories, aggressively attacking costs and pursuing the most value-creating path for our shareholders.”

Tagged with

Join the discussion!


Don't have a login but want to join the conversation? Become a Thurrott Premium or Basic User to participate

Comments (15)

15 responses to “HP Rejects Another Xerox Acquisition Offer”

  1. darkgrayknight

    What is the deal with companies buying other companies rather than making better products? I want more competition not less.

    • hellcatm

      In reply to darkgrayknight: I agree, but unfortunately this has become the American way. You would think there would be a law prohibiting big companies from buying one another. It does hamper competition, but until we get someone in office that will stop these and have the big companies like AT&T and such looked into for bad business practices and break them up, it'll keep happening.

    • markld

      In reply to darkgrayknight:

      Rational and reasonable.

      I always want more competition. I always want competition at every level from the beginning of a company to the when it's huge.

      When these large corporations have like 60-80%(just throwing out numbers, no science behind them) of market share, they seem to be less innovative or concerned about competition. They quit being entrepreneurial.

      I want companies/corporations to be run right. I hate corporate welfare, too... Chrysler, GM, should be gone since they didn't know how to run themselves correctly. Wall Street creeps 10 years ago should have gone to jail and still be in jail.

      • sandy

        In reply to Markld:

        The rot had set in as far back as Hewlett-Packard buying Compaq, seemingly just so that the prior downward trajectory could be hidden behind restructuring and (pointless) rebranding of everything Compaq to HP (while getting rid of almost every non-printer HP thing), then after massive cuts and sackings the CEO jumps ship before the damage those cuts did becomes readily apparent.

        • markld

          In reply to Sandy:

          I remember that rebranding of everything Compaq to HP.

          It was strange, kind of like is this an HP or Compaq when I looked at a PC or laptop, labeled HP?

          I knew something was not quite right about HP for a long time and steered clear of their products, except for a printer along time ago. Think they have done a better job of making better products in last few years, almost enough for me to get one of their laptops.

          HP chairman Chip Bergh makes sense (but any downfalls, it's really their own doing).

          Paraphrasing here: The combined companies would just not work well together or be a good fit. I think as a whole they would be a lot worse off.

          Really it's due to both companies ineptness and past mistakes. Probably more on HPs part and that is the reason for Xerox's evaluation.

          Yeah, unachievable synergies, lol, synergies is an interesting word, to me it can be a good thing or bad thing, as stupid people can ruin the mix.

          Thanks for a reply, I don't usually get replies

  2. hellcatm

    I would think HP would buy Xerox. I never hear anything about Xerox anymore.

  3. anoldamigauser

    This is nothing more than an attempt by Carl Icahn, who owns 11% of Xerox, and 4% of HP, to line his pockets once again. Xerox brings nothing to this deal, certainly not vision or management skills, and would saddle the combined company with an unserviceable debt load. Carl would do fine though.

    • markld

      In reply to AnOldAmigaUser:

      Haha, this deal didn't make sense. Now with your info, it makes more sense

    • wright_is

      In reply to AnOldAmigaUser:

      Yes, this is purley about Icahn stacking his pyramid has high as it can and selling it, before it collapses in a heap of dust. This is the dark side of capitalism, it has nothing to do with real capitalism or making value for a company or, you know, actually making products.

      This is purely about moving little bits of paper, or these days electronic bits around. The funny thing is, the little bits of paper aren't really interested.

  4. JH_Radio

    Thing is, the big get bigger because that's how capitalism works. While having the government be involved in everything, let's take a small company which wants to build something. How do you possibly compete? or better yet, having enough money to throe at it to actually make people want your product or marketing? And you wonder why Microsoft had so much trouble with Surface at first. I'd think that has something to do with it. and they had money to throe at it until they grew and made money. Or as another example, take Tesla. next to all of these car companies with dealerships etc. I dunno the answer though. You should be rewarded for putting work into things. But then companies like Verizon iHeartRadio Google etc can get so big that there's no way to compete if you want to enter into this market.

  5. William Clark

    As an HP 2-timer I can tell you that HP is a shadow of its former self. Bill and Dave would be rolling in their graves to see how far the company has fallen. Meg Whitman totally deconstructed the company in an attempt to sell it off. Much to her chagrin Hillary didn’t win the White House and her cabinet position evaporated just like HP’s stock price. If I were an HP stockholder, which I am not, I would advise the Board to sell while someone is willing to pay for the company.

  6. latesthindigk

    I would think HP would buy Xerox. I Want more....