According to reports published recently, an offer worth about $33 billion in cash and stocks has been made by the United States based printer maker Xerox Holdings Corp for personal computer maker HP Inc which is three times the size of Xerox.
The bid from Xerox was confirmed by HP but did not disclose the bid price. HP said in a statement that the it and Xerox have discussed a combination from time to time and the latest acquiring bid from Xerox will b considered “with an eye towards what is in the best interest of all our shareholders.”
Five days ago Enrique Lores, former president of HP’s imaging and printing business, officially took over as its chief executive.
Xerox also saw a change of guard at the top last year with the appointment of John Visentin as the company’s CEO under whom the company’s stock has rallied. He has also managed to bring an end to a long running dispute of Xerox with Fujifilm Holdings Corp, its joint venture partner.
Xerox would be selling off 25 per cent stake in the joint venture for $2.3 billion, the company said on Tuesday. As a means of ending the dispute, a lawsuit against Xerox was dropped by Fujifilm. Xerox has now set its sights on HP following the resolution of the lawsuit and with more cash at hand.
According to reports quoting sources with knowledge of the matter, an offer of between $22 and $23 per share, to be paid in cash and stock has been made by Xerox to acquire HP. The reports also said that Xerox has lined up financing from Citigroup Inc in order to secure financing for the cash part of the deal.
According to the report, through the process of creating an office technology supplies giant, Xerox believes it can achieve at least $2 billion in annual cost synergies form the deal. Reports also claimed that a response to the offer would be made by HP after taking a few days to study the offer.
There were no comments available to the reports from Xerox and Citigroup. The first reports about the offer by Xerox for HP was published by The Wall Street Journal.
HP shares closed 6.4% higher at $19.57 in New York on Wednesday. Xerox shares rose 3.6% to $37.66 which took the market capitalization of the company to $8.3 billion.
The deal for combining the two companies would help both the companies to better negotiate a stagnating printing market, said many analysts. Some however said that because the companies had different offerings and pricing models, therefore there would be challenges for integration.
“We would be left to question Xerox’s ability to finance such a large transaction and the potential overlap the two businesses would face,” Wells Fargo analysts wrote in a note.
Two of its major investors Carl Icahn and Darwin Deason forced Xerox to withdraw from an attempted merger with Fujifilm worth $6.1 billion because the investors went on to overthrow its board.
(Adapted from Reuters.com)