Xerox Goes Hostile In Bid To Take Over Struggling Hewlett Packard
Xerox Corporation has gone hostile in their bid to get control of struggling PC and printer Company Hewlett Packard
The Company now plans to make a $33.5 billion buyout bid directly to HP shareholders after the personal computer maker refused to open its books for due diligence before a deadline.
In the period ended Oct. 31, sales in the printing division fell 6% to $4.98 billion, with ink supplies dropping 7%. Consumer revenue declined 10% and commercial sales decreased by 2%.
In October alone PC sales fell 16% according to Strategic Analytics.
“We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity,” Xerox said in a letter to HP’s board.
HP did not immediately respond to a request for comment.
HP is three times the size of Xerox.
HP management claim that they have several options to create value for shareholders, other than accepting the offer valued at more than $33 billion in cash and stock and wasn’t “dependent on a Xerox combination.”
Xerox made their move for HP to consolidate the printing business at a time when both companies are stumbling.
HP’s printing division, a major source of profit, has seen falling sales because of weaker demand for ink supplies. HP has announced a major restructuring to stabilize the company, which could result in as much as a 16% reduction of its workforce by the end of fiscal 2022.
“Related to Xerox, I feel like we have seen this movie before when Carl Icahn meddled with Dell in a similar way,” said Patrick Moorhead, an analyst at Moor Insights & Strategy. “Xerox is a third of the size of HP, has been steadily declining in revenue, is running out of options, and needs HP more than HP needs it.”