Xerox in dinner charm offensive with HP

Xerox is aiming to woo major HP shareholders with an exclusive dinner, as it continues with its hostile bid for HP – a company nine times its own size.

 

The big red is asking HP shareholders to accept its new bid, which it upped by nine per cent to $24 a share, and to sack the HP board and replace it with Xerox-nominated directors.

HP says it will make a public comment on the latest assault by Xerox on Monday when it releases its half-year figures. It is widely anticipated HP will outright reject the sweetened deal. HP says the figures will give its shareholders full information and is confident it will sway them away from the Xerox offer.

The HP in question is the printer side of the business, which was spun off from the network and server business HP Enterprise three years ago. Xerox says its business is complimentary and joining the two together will release savings of $2bn, a figure which HP disputes. It also says the debt any merged company would be saddled with would be onerous.

Since major shareholder Carl Icahn dumped the Xerox board and CEO Jeff Jacobson 18 months ago, and installed his own man John Visentin as CEO, the Xerox stock has rallied, as Visentin has cut costs and seen Xerox engage on a share buyback, a typical strategy of Icahn to push up the share price.

HP itself is in a cost-cutting programme, which will see its global workforce shrink by around 9000 staff in the next two years.

The commercial print side of both businesses is a relatively small part of their operations, but both are huge players in the sector. The future of any combined business is unknown, although in the scheme of things buyers do like to sell off profitable parts of the business to realise profit.