Xerox has given HP an ultimatum in its effort to acquire the PC and printer maker, threatening to turn its bid into a hostile one unless the company agrees by next week to pursue a “friendly combination”.
HP turned down the $22-a-share bid on Sunday, saying it “significantly undervalues” the company, and asked for more information about Xerox’s business prospects. HP left the door open to “a potential combination” of the two companies.
In its response on Thursday, Xerox said its board is “determined to expeditiously pursue our proposed acquisition of HP to completion — we see no cause for further delay”.
“Accordingly, unless you and we agree on mutual confirmatory due diligence to support a friendly combination by 5:00pm. EST on Monday, November 25, 2019, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders,” John Visentin, Xerox chief executive, wrote in a letter to HP’s board.
HP didn’t immediately respond to a request for comment on the letter.
People briefed about the talks between the two companies said there was a strong desire on both sides to find a way to combine the companies as they agree that they would complement each other.
Xerox’s letter is an attempt to push HP to come to the table in a more constructive way rather than a full blown hostile threat, said a person close to the situation.
Xerox, known for its office printers and photocopiers, launched its unsolicited bid on November 5, a month after HP announced its intention to cut jobs under a turnround plan. HP’s shares were down 4 per cent year-to-date as of Thursday. Xerox has gained more than 95 per cent.
In the letter, Mr Visentin said there would be “no financing condition to the completion of our acquisition of HP”.
Activist investor Carl Icahn, a shareholder in both Xerox and HP, has called a tie-up a “no-brainer”. He told the Wall Street Journal in an interview last week he wasn’t set on a particular structure for a combination.