Xerox on Monday began taking its case to acquire HP directly to the PC and printing technology leader's stock owners by saying their share of the combined company could be worth more than 50% more than the current value of their HP stock.
In a presentation addressed to HP shareholders and made public Monday morning, Xerox said it is prepared to HP shareholders $17 a share for their HP stock, and 48% ownership in the combined company if they accept Xerox's terms. Xerox had that the combination of cash and equity ownership could give HP shareholders the equivalent of $31 a share in the merged company.
HP's shares traded Monday at around $20.50 .
Xerox said that by joining forces with HP, the new company would create $1 billion to $1.5 billion in new revenue growth by means such as integrating HP products into Xerox's service offerings and cross-selling each companies products. Xerox said it urged HP to engage in discussions and conduct three weeks of mutual due diligence about Xerox's terms in order to "realize the value that our offer represents."
"The value of the transaction goes beyond economics," said Xerox Chief Executive John Visentin, at the start of the presentation. "In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way."
HP has so far rejected Xerox's unsolicited acquisition offers, which began on Nov. 5 and included an offer of $22 a share, or $33.5 billion in total, for the longtime Silicon Valley technology leader. HP said Xerox's offer at that time undervalued the company. On Nov. 26, Xerox sent a letter to HP saying the company's sentiment "defies logic" and that it would go directly to HP shareholders in an effort to get them to push HP's board of directors to work out a deal.
Some tech industry analysts remained unsold on the likelihood of a Xerox-HP combination ever being truly successful.
"This presentation is kind of like the one that someone asking for your daughter's hand in marriage would produce economic advantages of merging the two families while overlooking the fact the daughter hates them," said Rob Enderle, director of tech research firm the Enderle Group. "Even if both sides supported the merger, there would be significant collateral damage due to conflicts in culture, compensation, span of control, product overlap, and channel conflicts. A hostile takeover makes all of these far worse."
Jesse Cohen, analyst with financial markets platform Investing.com, said Xerox's attempt to win over HP's shareholders was "ambitious", but was skeptical about what the eventual results would look like.
"A tie-up between the two aging hardware names carries significant risks and could cause some near-term downside in both stocks," Cohen said. "The ongoing war of words between the two names looks set to spill over into 2020."
Neither HP, nor Xerox, immediately returned requests for further comment on the matter.
