Xerox began hosting dinners for HP shareholders this week as it seeks support for its $35 billion bid to buy its larger printing market rival. HP’s board has yet to respond to Xerox’s latest offer – up from $22 to $24 a share – but says next week it will share “additional information about its plan to drive sustainable long-term value for its shareholders."
Xerox invited some HP shareholders to a dinner this week at a restaurant in the Riverside neighbourhood of Greenwich, Connecticut, and Xerox CEO John Visentin was expected to attend, according to Reuters. “Other such meetings are possible in the coming days,” said the report.
“The charm offensive comes after Xerox raised its cash-and-stock bid for HP last week by $2 to $24 per share ahead of a tender offer it plans to launch in early March. It is also asking HP shareholders to replace HP’s board directors with Xerox’s nominees at the company’s annual shareholder meeting later this year.”
There’s increasing speculation on Wall Street that HP will reject the latest offer from Xerox.
“HP, whose shares ended on Friday at $22.37, is expected to dismiss the sweetened offer as inadequate when it unveils its most recent quarterly earnings on Feb. 24,” said Reuters.
Analyst Amit Daryanani said HP will likely pursue “a stand-alone path, perhaps initiating a large share repurchase, and could announce incremental cost-cutting measures” in next week’s first quarter update.
In a statement last week, HP said it will present a live audio webcast of a conference call to review financial results for the first fiscal quarter on Monday, February 24, 2020 at 5:00 p.m. ET (US). The webcast will be available at www.hp.com/investor/2020Q1Webcast
“At that time, when out of its quiet period, HP will share additional information about its plan to drive sustainable long-term value for its shareholders, including through the execution of the company’s multi-year strategic and financial plan and the deployment of its strong balance sheet,” it said.
“HP wants its shareholders to have full information on the Company’s earnings and the value inherent in the Company before responding to Xerox’s February 10 press release.”
Xerox says the combination with HP would save $2 billion in cost synergies. HP disputes that figure and says its sale to Xerox would leave the combined company with too much debt. It also questioned how losing Fujifilm as a partner would impact Xerox’s supply chain.
HP’s board said earlier that billionaire activist investor Carl Icahn - who owns 10.9% of Xerox and has a 4.2% stake in HP - is driving Xerox’s takeover bid and added: “His interests are not aligned with those of other HP shareholders.”
