Xerox launches HP bid to shareholders

Xerox has officially launched its hostile takeover bid for HP, asking HP shareholders to sell their stock at $24 a share, and giving them seven weeks to do so.

 Unsolicited bid for HP: Carl Icahn

The HP board asked shareholders to do nothing until it had reviewed the offer, which it said would take ten days. The HP board has been implacably opposed to the unsolicited bid – driven by corporate activist Carl Icahn – from the start.

HP has already instigated the poison pill defence against Icahn's move – essentially a mechanism that allows it to issue more shares to stop a hostile bidder building up a knockout holding. Netflix used the same tactic to stop a build from Carl Icahn in 2012.

At its full year results briefing HP reiterated its opposition to the prosed takeover. “HP is out of the gate strong in Q1, with outstanding earnings and a robust plan to create significant value for shareholders,” said Enrique Lores, president and CEO, HP Inc. “Our three-year financial targets reflect a company at the top of its game, combining the industry’s best innovation with disciplined cost management and aggressive capital returns to support a compelling investment in both the short and long term.”

Lores added, “Our commitment to HP shareholders is unwavering and it’s abundantly clear the revised Xerox proposal meaningfully undervalues HP, creates significant risk and compromises the future of our company.”

“The HP board is united in its full support of the company’s strategy and team. HP has a proven track record of consistent value creation and it is well positioned in both print and personal systems to drive operating profit growth and attractive shareholder returns,” said Chip Bergh, chair of HP’s board of directors. “Our new capital return program enables us to optimize our balance sheet while maintaining the appropriate capital structure for the business.”

Carl Icahn owns 11 per cent of Xerox and 4 per cent of HP, and is the man who blocked Fujifilm’s ambitions for Xerox. Known as an activist investor – corporate raider in old language – the 83-year-old Icahn has amassed a US$17bn fortune from a 40-year career in corporate financing.

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, Versant, and Nuvera, is about four per cent of the overall Xerox business.