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Industry

Xerox maintains the pressure on HP

At the end of last year, Xerox was involved in ongoing talks about a potential merger or buy-out of HP. In the latest move in this two and fro, Xerox has acquired $24bn (£18bn) in Binding Financing Commitments in an attempt to assure HP that it can finance the proposed purchase.

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Xerox has attained funding from Bank of America to assure HP of its financial commitments

In November 2019, letters were made public by Xerox which outlined plans for a $27bn (£21bn) cash-and-stock offer for HP. HP confirmed this in a statement, however later reports showed that HP had put talks on hold momentarily.

The next development came when HP rejected Xerox’s offer claiming that it “significantly undervalues” the company. In a letter penned to Xerox by HP directors Enrique Lores and Chip Bergh, the pair described Xerox’s delivery of its offer as “aggressive” and accused the company of not providing adequate information.

In the latest update, John Visentin, vice chairman and chief executive officer of Xerox has written to Lores and Bergh to inform them of binding financing commitments that have been attained from Citi, Mizuho and Bank of America.

The letter refers to concerns raised by HP that Xerox have the ability to raise the capital necessary to finance its proposal and this funding is a bid to assure the company that it can.

We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained bidding financing commitments

Xerox also seems to have followed through with the promise it made at the end of last year to go directly to HP’s shareholders.

Visentin writes: “Over the last several weeks, we have engaged in constructive dialogue with many of your largest shareholders regarding the strategic benefits of our proposal to acquire HP.

“It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cash flow that could, in turn, enable increased investments in innovation and greater returns to shareholders.”

Concluding, the letter refers to the financing and says: “We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America.”

In response to this, Lores and Bergh have penned a letter which states that the financing does not address the key issue that the proposal “significantly undervalues HP”, adding that this is “not a basis for discussion”.

If you have any news, please email carys@linkpublishing.co.uk or join in with the conversation on Twitter and LinkedIn.


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