Xerox goes all out in hostile HP bid

Xerox is going all out with its hostile takeover bid for HP, its latest move to create a 25-slide set for HP shareholders on reasons why they should sell.

Directors of the two businesses are now in a war of words with each other as they battle for the support of the HP shareholders who will decide the future of the business.

Along with the slide set for all shareholders, Xerox CEO John Visentin is this week meeting with major HP shareholders to walk them through the Xerox case for its proposed acquisition of HP.

Xerox says the increased cash flow generated “would help pare debt, increase capital returns to shareholders, and drive greater investment in innovation that would put these storied brands at the forefront for decades to come.”

The HP Board says the offer is too low and would saddle the business with a gigantic $25bn debt, and that HP is well positioned for growth on its own.

The cash and share deal offers $22 a share, which is 10 per cent less than HP's year high of $24. Xerox, though, says that $17 cash, plus a stake in the 48 per cent that HP will own of the new company, means a $14 per share benefit to HP shareholders.

The deal is being driven by billionaire 83-year-old investor Carl Icahn, who is the biggest shareholder in Xerox with 11 per cent of its stock and has recently bought 63 million HP shares, giving him 4.24 per cent of the company.

HP is seven times the size of Xerox, with sales last year of US$58.8bn, while Xerox achieved sales of US$9.8bn.

The HP Graphic Solutions business, which develops well known print industry solutions including Indigo, PageWide, Latex, Scitex, and DesignJet, represents about eight per cent of the HP business.

The Xerox production print business, which includes Iridesse, iGen, and Versant, is about four per cent of the overall Xerox business.