Xerox Urges HP Acquisition, Citing Consolidation Benefits

According to Bloomberg, Xerox is prepared to give HP Inc. four weeks to decide if it would agree to be acquired by Xerox. Xerox is offering to buy HP Inc. for $27.3 billion, or for $22 a share in a cash-and-stock offer. That would give HP shareholders a 48 percent stake in the new combined HP-Xerox enterprise. Xerox has also reportedly lined up financing for the deal through Citigroup Inc.

Xerox urged HP to consider the deal, stating that consolidation is necessary in the print industry, issuing this statement last week: “Our industry is long overdue for consolidation, and those who move first will have a distinct advantage. We look forward to expeditiously moving this process forward and creating additional value for shareholders.” HP and Xerox are said to have held talks about a merger earlier this year.

Under the deal, Xerox is proposing that current CEO John Visentin, who is backed by investor Carl Icahn, and who was formerly an executive at Hewlett-Packard before it split into HP Enterprise and HP Inc., would lead the new combined HP-Xerox.

However, according to CRN, there seems to be a dispute regarding who would managed the new company, with CRN noting: “…there are some major disagreements over the specifics—such as which company would be the acquirer in the deal and which of the two management teams would run the combined company, according to the report. Bloomberg characterized the issues as ‘potentially intractable disagreements.'”

Some have also questioned the wisdom of Xerox suddenly managing a PC company (HP Inc. is split into two groups, one of which develops and markets PCs and related offerings, the other of which develops and markets printers, MFPs, 3D printers, commercial printers, and supplies and service). Several decades ago, Xerox marketed its own inhouse-developed PCs, but was never successful with them.

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